LG Energy Solution (LGES) CEO Kwon Young-soo, left, shakes hands with Honda Motor CEO Toshihiro Mibe at LGES headquarters in Seoul, Monday, after signing an agreement to establish a joint venture in the U.S. Courtesy of LGES

By Park Jae-hyuk

LG Energy Solution (LGES) and Honda Motor said Monday they agreed to establish a joint venture to produce lithium-ion batteries in the U.S. to power Honda and Acura electric vehicles for the North American market.

According to the agreement, LGES and Honda will invest $4.4 billion in total and establish a new factory in the U.S., aiming for an annual production capacity of approximately 40 gigawatt hours.

The location of the plant has yet to be finalized.

Based on Honda's plans for EV production in North America, the two companies aim to begin construction in early 2023, in order to enable the start of mass production of advanced lithium-ion batteries by the end of 2025.

"Our joint venture with Honda, which has a significant brand reputation, is yet another milestone in our medium- to long-term strategy of promoting electrification in the fast-growing North American market," LGES CEO Kwon Young-soo said. "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 Motor CEO Toshihiro Mibe said: "Aligned with our longstanding commitment to build products close to the customer, Honda is committed to the local procurement of EV batteries which are a critical component of EVs. This initiative in the U.S. with LGES, the leading global battery manufacturer, will be part of such an approach."