Honda Motor Co. and South Korea’s POSCO Future M Co. have announced plans to build a battery material plant in Canada. This facility will be a crucial component of Honda’s ambitious $11 billion investment in an electric vehicle (EV) production complex, designed to meet stringent U.S. requirements for federal tax benefits on clean cars.
The announcement came from Honda on Thursday, revealing that the plant would focus on producing cathode active materials and precursors, essential for the performance and cost-efficiency of EV batteries. This initiative is part of a broader strategy to enhance Honda’s EV supply chain in North America through a joint venture partnership with POSCO Future M.
POSCO Future M, a unit of the POSCO Group, highlighted the strategic significance of the new factory in a statement on Friday. According to the company, this move aims to establish a stable supply network for cathode materials in North America, supporting Honda’s goal to ramp up EV production to over 2 million units by 2030.
This collaboration builds on an existing relationship between POSCO Group and Honda, which previously extended beyond steel to include batteries and other EV-related sectors. Additionally, POSCO Future M is also engaged in a joint venture with General Motors Co. in Quebec, emphasizing its growing presence in the North American market.
The U.S. government offers substantial incentives, including up to $7,500 per EV, provided the vehicles are assembled in North America with minerals mined or processed either domestically or by its free trade partners. These incentives are crafted to discourage the use of materials from foreign entities of concern, notably those significantly influenced by China.
The new plant is part of Honda’s broader strategy to develop a comprehensive EV value chain in Canada, preparing for the anticipated surge in North American EV demand. Honda’s CEO, Toshihiro Mibe, emphasized the company’s commitment to strengthening its EV supply system in light of expected market growth.
Honda’s Canadian operations are set to become a cornerstone of its North American EV strategy, with the Alliston, Ontario complex projected to commence commercial operations in 2028. This facility is expected to produce 240,000 EVs annually and support a battery capacity of 36 gigawatt hours (GWh) per year.
This initiative follows Honda’s significant investments in transforming its Ohio plants into an EV hub and partnering with LG Energy Solution Ltd. to construct a $4.4 billion battery cell factory, underscoring its deep commitment to leading the EV transition in North America.
