Honda to spend billions on Fayette County battery plant

Honda announced Tuesday that it has picked Fayette County for a $3.5 billion plant that will make batteries for electric vehicles. The automaker also plans to spend $700 million to retool three of its Ohio plants to make electric vehicles and provide components for them.

The plant, part of a joint venture with South Korean battery maker LG Energy Solution, will employ 2,200 workers. The three plants where the $700 million will be invested − the Marysville Auto Plant, the East Liberty Auto Plant and the Anna Engine Plant − will add 327 workers.

Honda says the two companies have committed to spending a minimum of $3.5 billion on the plant, but that total could eventually hit $4.4 billion.

Reactions:Political, business leaders celebrate Honda investment in Ohio battery factory

Honda announced its partnership with LG in August, but did not identify where the plant would be built.

Why Honda chose Jeffersonville

The company said Tuesday that the plant will be built in the Mid-West Mega Commerce Center, east of Interstate 71 and near U.S. Route 35, near Jeffersonville, about 40 miles southwest of Columbus and 70 miles northeast of Cincinnati. The state expects to make "targeted investments" to improve roadways in the area, said Ohio Department of Transportation Director Jack Marchbanks.

The location was picked for several reasons, including proximity to Honda's plants, access to resources and availability of labor, Bob Nelson, executive vice president of American Honda Motor Co., told reporters in advance of Tuesday's announcement.

The announcement comes 45 years to the day when Honda released details of its first manufacturing plant in the state. It lays out the automaker's transition from internal combustion engines to electric vehicles in coming decades.

"We now face a once-in-a-100-years change from the internal combustion engine to electrification," Nelson said. "Once again this requires a bold vision for the future."

Ohio to become electric vehicle hub

Honda plans to make Ohio an electric vehicle hub that will produce expertise to be shared across Honda’s North American auto operations in the years ahead. It will leverage Honda's longstanding production, product development, and purchasing operations in central Ohio.

“In another major step toward electrification, LG Energy Solution’s innovative battery technologieswill not only power Honda’s brand-new EV models but support Ohio’s green economy,” Dong-Myung Kim, an LG executive vice president, said in a statement.

Honda and LG plan to start construction early next year with a goal of having the plant finished by the end of 2024. Production of pouch-type, lithium-ion batteries is scheduled to begin by the end of 2025.

The plant will produce batteries exclusively for Honda and Acura vehicles.

“It has been more than four decades since Honda first saw great promise in Ohio, and although the way we manufacture vehicles is evolving, one thing that will stay the same is the quality of our workforce and their ability to get the job done,” Gov. Mike DeWine said as part of the announcement at the Statehouse.

"It’s another win for America and another win for Ohio, with Honda and LG committing more than $5 billion toward electric vehicle battery manufacturing and factory retooling across the state," President Joe Biden said in a statement.

Honda's EV strategy

Honda has trailed some of its competitors when it comes to electric vehicles. Honda offers hybrid Accords and CR-Vs, and plans to introduce the fully electric Prologue SUV, which it's developing with GM, in 2024, replacing the Clarity electric sedan.

Honda plans to begin production of EVs in 2026. The automaker has set a goal of all of its sales coming from battery-electric and fuel cell electric vehicles by 2040, and becoming carbon neutral for all products and corporate activities by 2050.

Workers in Anna, Ohio, will make the battery case that will be combined with the battery modules from the battery plant on a line at Marysville. The complete battery unit will be installed in electric vehicles by workers in Marysville and East Liberty, Ohio.

“This event will set the course to chart the development of our electrified future for the next 40 years and beyond,’’ Nelson said.

Nelson said financial incentives with the state are being negotiated.

Honda isn't ready to announce how many electric vehicles will be made in the state, Nelson said.

Honda's history of Ohio investment

The investment extends Honda's reach into the state that dates to 1979 when it began motorcycle production in Marysville. It began making cars in Marysville in November 1982.

Honda has invested $14.2 billion in Ohio and has 14,400 employees. It opened a $124 million wind tunnel earlier this year in East Liberty.

The announcement is the latest in a string of announcements by automakers and other companies tied to electric vehicles in the state.

LG is in a similar partnership with General Motors in Lordstown in northeast Ohio and Ford is investing $1.5 billion at its plant at Avon Lake to produce commercial electric vehicles. GM is making a separate $760 million investment in Toledo to make drive units that will be used in future GM electric vehicles.

A Chinese manufacturer of materials used in batteries that power electric vehicles and other products, Semcorp Manufacturing USA, has announced a $900 million investment in Sidney in western Ohio.

A new U.S. law, the Inflation Reduction Act, gives companies even more incentive to build batteries in North America. It includes a tax credit of up to $7,500 that could be used to defray the cost of purchasing an electric vehicle. But to qualify for the full credit, the electric vehicle must contain a battery built in North America with 40% of the metals mined or recycled on the continent.

Nelson said the company has been planning the battery and plant investments for years, well ahead of the law's passage earlier this year.

Electric vehicle sales are expected to rise dramatically between now and 2030 in the U.S. and globally, but even at the start of the next decade, they will be just over one-third of U.S. new vehicle sales. The LMC Automotive consulting firm expects EVs to be 5.6% of U.S. sales this year, rising to 13.5% by 2025 and 36.4% in 2030.

Information from the Associated Press is included in this report.

mawilliams@dispatch.com

@BizMarkWilliams

This article originally appeared on The Columbus Dispatch: Honda to spend billions to turn Ohio into electric vehicle hub