July 13, 2023; Marysville, Ohio, USA; LG Energy Solution President and CEO Robert Lee leads the joint venture with Honda to build a battery plant in Jeffersonville, Ohio. (Credit: Adam Cairns/Columbus Dispatch)
MARYSVILLE − The fits and starts over the decades of trying to build a market for electric vehicles in the U.S. may be ready to finally pay off, says a key executive of one of the world's biggest battery companies, which has partnered with Honda in Ohio and other automakers to build batteries to power those vehicles.
"The (automakers) are highly committed at this point and the products will be there," Robert Lee, who leads LG Energy Solution's operations in North America, told The Dispatch. "Nobody know 100% exactly how much the market they will penetrate (or) how fast."
"I do see the signals this time around that the market will take hold," said Lee, in an interview from Honda's Heritage Center in Marysville. "I'm a believer that there will be long coexistence of EVs and (internal combustion engines). ... I don't believe ICEs will immediately drop off and go away."
The South Korean company and the Japanese automaker announced plans last October to invest at least $3.5 billion to build a factory to make batteries for Honda electric vehicles that will start production by the end of 2025. Lee is president and CEO of the joint venture.
The first steel beam was installed this summer at the LG Energy Solution and Honda joint venture battery plant site in Jeffersonville.
The companies broke ground on the 2-million-square-foot plant in Jeffersonville in Fayette County in February that will produce batteries exclusively for Honda and Acura vehicles. LG owns 51% of the plant and Honda 49%.
LG is competing with a number of companies to serve the growing market for EVs while also partnering with some of the biggest automakers in the world on similar projects.
Lee, 57, who joined LG Energy Solution a year ago from the German company Continental Tire, where he led North American operations, expects the number of competitors to dwindle over time and that LG has the advantage given its long history in battery development.
"Whoever demonstrates they're the best will become a market leader. I'm not saying there will be only one battery player, but there will be fewer. ... I feel like LG Energy Solution right how has a better chance to be that No. 1 company than any other company," he said.
Jul 13, 2023; Marysville, Ohio, USA; LG Energy Solution president and CEO Robert Lee holds a pouch battery cell that the company uses in electric vehicles.
Who is LG Energy Solution?
LG Energy Solution's history dates to 1947 in South Korea with the formation of Lucky Chemical. The name was subsequently changed to LG Chem.
In 1992, the company began its first research on lithium-ion batteries. Initially, the work supported cell phones, personal computers and consumer electronics before going into battery development for vehicles.
"There was a vision ... that electrification will happen, that EVs will take off," Lee said.
In 2009, LG Chem supplied batteries to General Motors for the Chevrolet Volt.
In 2020, the company spun off the battery business and formed LG Energy Solution. The same year, LG Energy and GM formed Ultium Cells, an EV battery company with three plants, including in Warren in northeast Ohio. The Warren plant began producing battery cells last August.
LG has struck similar partnerships in the U.S. with Hyundai Motor Group and Stellantis, along with the Honda deal.
"Having this commitment is really critical because LG invested in this business for 20 years without making money," Lee said. "This is unique about LG's story and why it has been so difficult for U.S. public companies to be in this space."
What's different now about the EV market?
Ford Motor, GM, Volkswagen and most other big automakers are investing billion of dollars in developing new electric vehicles in a market that's been dominated by Tesla.
Honda, which has been behind some of the other big automakers in terms of EV development, plans to begin production of EVs in 2026 and has set Ohio to be its North American EV hub.
The automaker has a goal of all 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.
Jul 13, 2023; Marysville, Ohio, USA; LG Energy Solution president and CEO Robert Lee leads the joint venture with Honda to build a battery plant in Jeffersonville, Ohio.
"In the U.S., what I see differently now than ever before is that U.S. (automakers) are all in," Lee said.
New vehicles are coming out, and they're better and cheaper than the limited choices of years past, he said.
Government incentives can help the push toward electrification, but that only goes so far, Lee said.
"Fundamentally, the product has to have a value proposition," he said. "If you look at the EVs now, they are coming out with very good vehicles."
The industry may be at a tipping point given that electric vehicles are major sellers in the U.S. market, he said.
Lee believes Honda customers will adapt more quickly to electric vehicles because Honda customers already focus on smaller, fuel-efficient vehicles.
"They tend to be younger. That's exactly the right customers for the transition to electrification," he said. "That segment is going to convert much more quickly than the guys driving around the huge pickups. That segment is going to be harder to convert."
Are federal incentives factoring into LG's plans?
The Inflation Reduction Act passed by Congress in 2022 provides federal incentives for automakers to make battery-powered vehicles and for consumers to buy them.
Good Jobs First, which promotes corporate and government accountability in economic development, issued a critical report July 6 that calculated that factories producing batteries for electric vehicles will receive $200 billion over the next decade from the law. That's far higher than the $31 billion estimated by Congress’s Joint Committee on Taxation, according to a Good Jobs First analysis.
On top of that, the group said these factories have been promised additional state and local incentives of $13 billion.
The group estimated that Honda and LG's investment of at least $3.5 billion will result in federal incentives of $9.1 billion.
The group cites a provision in the law that provides what is called the American Manufacturing Production Credit in which battery companies will receive tax credits based on components and kilowatt hours of the batteries in an electric vehicle. In one example, Good Jobs First said each Ford F-150 Lightning can result in $4,400 in federal tax credits.
Ohio is offering incentives totaling $156.3 million for the battery plant and also for the $700 million Honda is spending to retool three of its Ohio factories to make EV components and the cars.
Good Jobs First says the incentives for the battery companies come without a promise to pay good wages to workers at the battery plants.
The federal incentives work out to about $4.3 million for each of the 2,200 jobs that the plant in Jeffersonville is expected to create, according to Good Jobs First's analysis that calculated wages for workers at the plants at $46,500, below the $59,093 average of other auto production workers.
Incentives can help the transition to electrification go faster, Lee said, but LG had not factored the incentives into its expansion plans in North America.
He noted that LG, for example, had agreed to build the Jeffersonville plant with Honda before Congress enacted the federal incentives. Also, federal incentives can change from one administration to the next.
"We've been committed. We feel like we have the chance to be the global No. 1 company. We made the decisions to make these $4-$5 billion investments even before the government support came in," he said. "We're benefiting now because we took some risks."
Still, Lee acknowledged that the company is benefiting from the Inflation Reduction Act as are consumers.
"We welcome the IRA. It's great for us. It's maybe the reason to accelerate one or two of the other plants we were planning," he said.
Partnerships key to LG
Most of the plants that LG has committed to in North America are done in partnership with automakers such as the deal with Honda.
"The product is such a critical part of the vehicle," Lee said. "It's really important for the (automaker) to have a consistent supply of these products that they are building the vehicle on top of."
Jul 13, 2023; Marysville, Ohio, USA; LG Energy Solution president and CEO Robert Lee leads the joint venture with Honda to build a battery plant in Jeffersonville, Ohio.
And for LG, the partnership with the automaker gives LG a consistent customer for the batteries being made.
"That's why, strategically, it makes sense for both companies to collaborate this way," he said.
"If we do a great job with this project and Honda's doing a great job with its vehicles, that will allow us to do more business," he said. "That's how we grow."
Is the infrastructure ready for EVs?
Drivers who own a home with a garage can easily charge their vehicle overnight, Lee said.
For those who live in an apartment or a more urban area, it's trickier. They likely will need to use a public charging station, he said.
"There are certain segments of the market who are ready, who might use an EV for their daily commute where 200 or 300 miles is plenty," he said. "If you drive eight hours or 500 or 600 miles periodically, an EV is not the first choice yet."
