Honda Motor and LG Energy will build a $4.4 billion electric vehicle battery manufacturing facility in the United States

Honda Motor Co. and LG Energy Solution Ltd. said on Monday that they will build a $4.4 billion lithium-ion battery plant in the United States for electric vehicles.

As the United States implements stricter restrictions and restricts eligibility for tax credits, a trend toward electric vehicles (EV) could intensify, and battery makers are attempting to increase production in the country.

According to the businesses, the location of the plant has not yet been finalized, but two people with knowledge of the subject have confirmed that Honda is seriously considering Ohio, where it has its largest U.S. production facility.

The companies anticipate a production capacity of around 40 GWh per year, with batteries supplied exclusively to Honda North American facilities for use in Honda and Acura electric vehicles.

Prior to establishing the facility, it is planned that the partners will form a joint venture, with construction commencing in early 2023 and mass production started by the end of 2025.

The administration of Ohio Governor Mike DeWine is working with Honda and LG to "guarantee that they choose Ohio for this significant electric battery project." According to those familiar with the issue, an announcement regarding the location could be made within the next several weeks.

The U.S. government has promoted programs to enhance domestic battery and electric vehicle (EV) production.

President Joe Biden signed this month a $430 billion climate, health care, and tax plan that bars tax credits for electric vehicles manufactured outside of North America.

Ali Zaidi, the White House's Deputy National Climate Advisor, praised Honda LG's "large investment," which he attributed to climate and infrastructure laws.

Jennifer Granholm, the United States' secretary of energy, declared that the administration was "returning domestic battery manufacture to provide Americans with well-paying jobs that will fuel the EV revolution."

California proposed a plan this week demanding that by 2035, all new vehicles sold in the state must be plug-in electric hybrids or electric vehicles.

The combination of strong local electric car production and timely battery supply, according to the two companies, will put them in "the strongest position to confront the fast developing North American EV market."

LG Energy Solution, whose primary focus is the research of lithium-ion battery materials and next-generation batteries, also offers EV batteries and has joint venture agreements with General Motors (NYSE:GM), Hyundai Motor Co., and Stellantis.

Panasonic Energy Co, a subsidiary of tech conglomerate Panasonic Holdings Corp and a significant Tesla Inc (NASDAQ:TSLA) supplier, said in July that Kansas would be the site of a new $4 billion battery plant.

Honda established a goal in January of this year to release 30 EV models worldwide and produce around 2 million EVs annually by 2030.