Joe Biden’s action urges automakers to build plant in North America
After U.S. President Joe Biden signed legislation earlier this month, electric car manufacturers and battery producers appeared to rush to North America.
LG Energy Solution and Honda Motor announced on Aug. 29 that the two Asian corporations would invest $4.4 billion to build a joint venture and a U.S. battery plant.
The decision appears to be affected by the new U.S. bill, which makes any electric cars assembled outside North America illegible for tax credits.
Although the strict sourcing rule caused criticism from European Union and South Korea on top of several automakers, the Biden administration went ahead with it.
Companies seem to have no choice but to follow the new standard, and LG Energy Solution and Honda Motor were the first to do so.
The two have yet to finalize the location of the joint venture plant, but they strive to begin construction in early 2023 with the aim of rolling out lithium-ion batteries in 2025.
They will be used for electric cars of Honda Motor, which has vowed to bet on the electrification of its models.
“I don’t think that LG Energy Solution and Honda Motor met to deal with the new U.S. bill after it was signed. I am sure that they started the discussion about joint investment quite a long time ago,” Prof. Kim Pil-soo at Daelim University said.
“But I think that the U.S. bill signed by President Biden accelerated their decision-making procedures. More are expected to follow suit of the two players.”
In their joint statement, however, neither of the corporations commented on the new U.S. bill.
“Our joint venture with Honda, which has a significant brand reputation, is yet another milestone in our mid- to long-term strategy of promoting electrification in the fast-growing North American market,” LG Energy Solution CEO Kwon Young-soo said.
Honda President Toshihiro Mibe also said that it aims for carbon neutrality for all products by 2050.
“Aligned with our longstanding commitment to building 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,” he said.