LG Energy Solution will sell the building of its U.S. battery plant to the U.S. subsidiary of the Japanese finished car corporations Honda. As the slowdown in battery market demand has been prolonged by the electric vehicle chasm (temporary demand stagnation), the company plans to secure liquidity and push for operational efficiency.
According to the Financial Supervisory Service's electronic disclosure system on the 24th, LG Energy Solution held a board meeting the previous day and disclosed that it will sell the building and building-related asset of the L-H Battery Company plant in Ohio to Honda's U.S. subsidiary. The plant land and equipment were excluded from the sale. L-H Battery Company is a joint venture (JV) established in 2023 by LG Energy Solution and Honda.
As of the end of last month, the sale price is 422.43 billion won based on the asset value, but the final sale price may change depending on future due diligence and exchange rates. Receipt of the sale proceeds is expected in the first half of next year.
As growth in the North American EV market slowed due to the EV chasm and expanded policy uncertainty such as the abolition of U.S. electric vehicle (EV) subsidies, the company plans to increase liquidity rather than tying up large funds in facility asset and use it for the JV's operating funds and borrowing fund repayment.
The sold building will be used under a lease to Honda America by L-H Battery Company, so there will be no changes to production and operating plans. By using a lease contract for building investment expense, which accounts for the largest portion of investment costs, the company plans to ease short-term investment burdens and improve cash flow.
The company said the building sale will further solidify the joint project with Honda. An LG Energy Solution official said, "The JV with Honda is one of the future core bases in the North American market," adding, "Based on the two companies' solid partnership, we will respond proactively to market conditions to overcome short-term difficulties and lay the groundwork for mid- to long-term growth."
Meanwhile, the joint plant of the two companies is scheduled to go into full operation next year as planned. The batteries produced will be installed in Honda and Acura models for the North American market. The expansion of mass production for full hybrid (FHEV) and energy storage systems (ESS) is also under review.