Honda Motor Company announced it is partnering with South Korea-based LG Energy Solution to construct a new battery plant in the U.S., establishing a joint venture (JV) with the battery manufacturer.

The new plant would enable Honda to produce lithium-ion batteries to power electric models of its Honda and Acura vehicle brands. Together, LG Energy and Honda will invest a combined $4.4 billion in the new plant, which will have an estimated annual production capacity of 40 gigawatt hours. Construction on the plant is scheduled to begin in early 2023, and is expected to be completed by the end of 2025.

Shares of Honda (HMC) rose 1.8% yesterday and are 1.9% higher in pre-market trading following the announcement. Shares are down about 7% year-to-date.

Commitment to Carbon Neutrality

Honda is committed to achieving carbon neutrality across all its products and corporate activities, according to president and CEO Toshihiro Mibe. Its pledge includes a goal to phase out all fossil fuel-powered vehicles by 2040 and transition to a fully-electric fleet. Honda joins several competitors in pledging to a net-zero transition, in response to stricter environmental and energy regulations worldwide. Several automakers, including General Motors, Ford, Rivian Automotive, and Hyundai Motor, have made pledges in recent years to accelerate their transition to a fully-electric fleet.