Honda, LG team up to build $4.4 billion EV battery plant in the U.S.
Yahoo Finance reporter Pras Subramanian discusses Honda and LG teaming up for a new EV battery plant and how more and more companies are investing billions in these plants across the U.S.
DAVE BRIGGS: The Inflation Reduction Act offers tax advantages for electric vehicle buyers and makers. But a bulk of the vehicle's parts have to be made in the US. So now car and battery-makers are teaming up to build new plants across America. Yahoo Finance autos reporter Pras Subramanian here with the latest. Pras, what are we learning?
PRAS SUBRMANIAN: We're going to see a lot more of these big deals, these big electronic companies and automakers making these battery factories in the US because of the big incentives that are in place right now. So they're basically offering $35 per kilowatt hour as an incentive to make batteries in the US. And that comes out to about $3,000 to $3,500 bucks per car.
And for a factory like the one you mentioned with Honda and LG, they're going to create around 40 gigawatt hours of power. What that means is they're going to get about 1.2 billion in tax incentives just to make some new batteries in this country. So you can see why a lot of big money there, a lot of incentives there. That's why it's going to come home. And it's funny because other CEOs talk about how these are bigger effects than the actual consumer credits that they're offering.
DAVE BRIGGS: Interesting.
RACHELLE AKUFFO: And so when you think about where they're headed with these large investments though, tell us about the issues that battery companies are having when it comes to mining the necessary materials.
PRAS SUBRMANIAN: Yeah, we've all these huge targets that the automakers want to hit by 2030, 2025. The federal government wants to have half of all cars sold in the country be electric. But the big issue is that we don't have, potentially, the battery materials like lithium and things like that that are needed to actually make the chemistries in the batteries. In fact, Ford's CEO Jim Farley said in the last earnings call that the whole globe has 50% of materials needed for all these automakers to actually hit those targets.
So you can basically kind of-- if things don't change, you can cut all these targets in half. So it's not all bad news though because the batteries are improving. The chemistries are changing. So you might be able to work around that. But currently, you can have all these factories. You can have all these cars being sold. If you don't have the battery materials, you can't actually make them.
DAVE BRIGGS: I remember RJ Scaringe saying 90% to 95% of the battery supply chain does not exist that we're going to need a couple of months back. What about charging infrastructure? Does that exist?
PRAS SUBRMANIAN: Again, another one of these puzzles in this mix, right? We're seeing that there's a lot of big deals being put in place, new money coming from the Biden White House to actually fund these corridors where you can have these DC fast chargers across the country.
It looks like a lot there, but this is a big country, right? And I myself, when I've reviewed cars, have had issues with finding the chargers. And then the chargers don't work once you get there. It's just an easier, more convenient way to travel so far with gas. So there's this hope that maybe this changes.
Private enterprise, public companies, or public government actually putting the money into actually building a network that we can actually use to travel around the country. Right now, it's still in the early stages.
DAVE BRIGGS: Looks like some large stretches in west Texas, North, South Dakota, and a number of states. Pras Subramanian, good stuff, thank you.