US Battery Factory News From Honda/LG & Panasonic
![](https://cleantechnica.com/files/2022/08/Acura-Precision-EV-Concept-Press-Photo-e1661580703942.jpg)
Joe Biden can’t claim all the credit for the American battery factory news last week from Honda, LG Energy Solution, and Panasonic. Plans for those new facilities were probably far along before the Inflation Reduction Act was signed. But the timing of the announcements so soon after the new legislation went into effect can’t be entirely coincidental either.
Honda & LGES 40 GWh Battery Factory
In a joint press release on August 29, Honda and LG Energy Solution announced they had reached an agreement to create a joint venture company that will manufacture lithium-ion batteries in America to power Honda and Acura EVs for the North American market. The site of the new factory is yet to be determined, but it will cost $4.4 billion and have an annual production capacity of approximately 40GWh.
The pouch-type batteries produced at the new factory will be supplied exclusively to Honda facilities in North America. Construction is expected to begin early next year with full production scheduled for the end of 2025.
“Our joint venture with Honda, which has significant brand reputation, is yet another milestone in our mid to long term strategy of promoting electrification in the fast growing North American market,” said Youngsoo Kwon, CEO of LG Energy Solution. “Since our ultimate goal is to earn our valued customers’ trust and respect, we aspire to position ourselves as a leading battery innovator, working with Honda in achieving its core initiatives for electrification, as well as providing sustainable energy solutions to discerning end consumers.”
Honda CEO Toshihiro Mibe said, “Honda is working toward our target to realize carbon neutrality for all products and corporate activities the company is involved in by 2050. Aligned with our longstanding commitment to build products close to the customer, Honda is committed to the local procurement of EV batteries which is a critical component of EVs. This initiative in the U.S. with LGES, the leading global battery manufacturer, will be part of such a Honda approach.”
According to Automotive News Europe, Honda plans to build about 800,000 electric vehicles in North America by 2030, which means 40 to 50% of its sales in that market will be EVs. Honda will invest more than $36 billion over the next 10 years to electrify its cars and improve the software in its vehicles. It expects to introduce 30 battery-electric models globally and produce 2 million EVs annually by 2030.
Featured image provided by Acura.
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Featured image provided by Acura.
Honda is planning to sell 70,000 Honda Prologue crossover SUVs by 2024. That car will be built in Spring Hill, Tennessee, on a platform developed by General Motors. This month, the Acura brand teased the Precision EV Concept, saying it will be called the ZDX. That car will most likely also be built in Tennessee and is expected in 2024. It is probably no coincidence that LGES is GM’s battery supplier as well. Honda says it will introduce its own EVs for the 2026 model year.
Panasonic Chooses Oklahoma For Fourth US Battery Factory
Based on a report by the Wall Street Journal, Reuters says that Panasonic has chosen Oklahoma as the site for its fourth US battery factory. The factory will cost about $4 billion and will employ up to 4000 workers, according to sources. A Panasonic spokesperson said only, “We are examining various growth strategies for our automotive battery business, but there is no further information that we can share at the moment aside from what we have already announced.”
Last month, the company said it would build its third US battery factory in Kansas. The Oklahoma factory will be nearer the new Tesla Gigafactory in Austin, Texas. Panasonic has partnered with Tesla for more than a decade, supplying it with batteries from its factory in Nevada.
The government of Oklahoma is reported to have offered an incentive package of up to $698 million to attracting an unidentified company that will invest a minimum of $3.6 billion and create at least 4,000 new jobs within five years. It appears that unidentified company is Panasonic.
The Battery Materials Conundrum
The new federal law will require the batteries for electric cars be manufactured in the US in order to qualify for federal tax credits. But those batteries will also need to be made from materials sourced from inside the US or from a country the US has a free trade agreement with. China is not one of those countries but it controls most of the battery materials supply chain globally.
Battery manufacturers in South Korea — LG Energy Solutions, SK On, and Samsung SDI — together manufacture about a quarter of all EV batteries for the world. Not surprisingly, most of the precursor materials for all those batteries are sourced from China. The new federal law has caused those companies to now seek new sources of supply.
According to Reuters, a delegation from South Korea will visit the US soon to ask the US government to delay the new battery materials rule to give those companies more time to comply. Part of the concern is that it will take a long time to verify where all the components and minerals came from, let alone make any changes to sourcing. “We don’t have many options other than asking the United States to alleviate the battery component and mineral rules and to delay the actual implementation,” said an anonymous source.
The delegation is expected to tell representatives from the US Trade Representative’s office and the US Treasury that the new law may violate trade norms such as the US-South Korea free trade agreement and the WTO agreement, according to sources within the South Korean government.
Battery manufacturers are now struggling to find new sources to supply battery materials, but it won’t be easy, since at the present time, 58% of lithium, 64% of cobalt, and 70% of graphite comes from China. As demand for electric cars intensifies, finding alternative sources during a time of supply shortages will be challenging, to say the least.
Panasonic may be a Japanese company, but it will face the same battery materials sourcing issues as every other battery manufacturer that wants to be part of the EV revolution in the US. Policies have consequences, and one of those consequences is a scramble among battery manufacturers to reduce their reliance on Chinese-supplied battery materials. That isn’t going to happen overnight and it is unlikely to lower the cost of electric cars any time soon either. There’s a bumpy road ahead for the industry. Time to buckle up.
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