industrials

Honda/LG: US battery deal boosts EV power of friends electric

So much for the unshakeable supplier relationships that supposedly characterise Japanese industry. Honda is collaborating with South Korea’s LG to build a $4.4bn battery plant in the US. The tie-up is the latest sign that Panasonic is losing its position as a key supplier to Japanese automakers.

The partners would start building the new lithium-ion electric car battery plant early next year. Mass production would begin by the end of 2025. Ohio, home to Honda’s main US factory, would reportedly be the location.

Panasonic might superficially seem the easier pick for Honda’s battery partner. The pair have been involved in research for years. The two formed a joint venture company in Indonesia four years ago. Their local ties are mirrored by those of LG Energy Solution. In South Korea, it supplies all the local automakers including Hyundai, Kia and Edison Motors.

Panasonic and LG meanwhile rub shoulders as Tesla’s main battery suppliers. But LG has a more diversified client base — including Porsche, Ford, Volkswagen and General Motors — and the experience that comes with that. In Japan, it has won over Nissan and Isuzu, the largest local commercial vehicle maker.

Honda shares are up a tenth this year. It has revealed an unexpectedly aggressive push into the electric market. The group plans to roll out 30 electric models globally and produce about 2mn units a year by 2030. It wants to completely phase out petrol cars by 2040.

For Honda, the US accounts for nearly a third of global sales. A stable supply chain in the region is critical. President Joe Biden this month signed a bill excluding electric cars assembled outside North America from receiving tax credits.

Honda’s stock, at 7 times forward earnings, has long suffered a discount to its much larger Japanese rival Toyota. But when it comes to electric vehicles, Toyota is just as far behind. The tie-in with LG will help give Honda the edge in the crucial battle for battery supplies.

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hello, I am Flora Khan and i work journalist in allnewshouse website i work in other sites like forbes and washington post with 5 years in experience.

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