I’ve been tracking the collapse of America’s EV battery boom for months, and this week’s news confirms the pattern: Korean battery makers are retreating while Honda quietly positions itself for the post-subsidy era.

Honda is buying out LG Energy Solution’s share of their Ohio battery joint venture for $2.9 billion, Bloomberg reports. The deal, expected to close by the end of February 2025, transfers the factory building and facilities to Honda’s U.S. subsidiary. LG will continue operating under a lease agreement, with no changes to production plans.

For prospective Honda EV buyers, this is actually good news buried in retreat headlines.

The Real Story: Korean Battery Makers Are Running

This isn’t an isolated deal. Last week, Ford cancelled a $6.5 billion battery supply contract with LG Energy Solution, one of the largest contract cancellations in EV supply chain history. That deal, signed just 14 months ago in October 2024, covered 109 GWh of batteries for Ford’s European EVs through 2032.

The cancelled Ford contract represented roughly 28.5% of LG’s annual revenue. Now LG is selling buildings to Honda to reduce capital burden.

Meanwhile, Ford is also dismantling its $11.4 billion BlueOval SK joint venture with Korea’s SK On, transitioning toward independent ownership of battery plants in Kentucky and Tennessee. The pattern is unmistakable: American automakers are either abandoning Korean battery partnerships or taking full control.

What This Means for Honda EV Buyers

Honda’s move to own the Ohio facility outright strengthens its position on two fronts that directly affect buyers:

Tax credit eligibility: Domestic battery production helps Honda meet the stringent sourcing requirements for the federal EV tax credit. While the $7,500 credit expired for new purchases in September 2025, future policy changes could restore incentives tied to domestic manufacturing.

Tariff protection: With U.S.-made batteries, Honda EVs face less exposure to import tariffs that have roiled the industry. As we’ve covered, the Trump administration’s tariff policies have already forced major automaker writedowns, including Ford’s $19.5 billion charge.

The Ohio plant, located in Fayette County about 40 miles southwest of Columbus, was originally announced in October 2022 as a $4.4 billion joint investment creating 2,200 jobs. Mass production remains on track for the end of 2025, supporting Honda’s North American EV lineup.

EVXL’s Take

Here’s what I expect: Honda just bought insurance against tariff chaos at what may prove to be a discount price. LG needed to reduce capital exposure after losing the Ford contract, giving Honda leverage in negotiations. The $2.9 billion price tag for a facility originally valued at $4.4 billion suggests Honda got favorable terms.

This connects to our ongoing coverage of Honda’s EV struggles. The company slashed its EV sales target to just 20% by 2030 and cut electrification investment by $21 billion. But securing domestic battery production is one of the few moves that makes strategic sense amid the chaos.

For prospective Honda EV buyers, this is quietly reassuring. While Honda’s EV ambitions have shrunk, the vehicles they do produce will have a more secure supply chain than competitors still dependent on Korean imports or Chinese components.

Are you considering a Honda Prologue or waiting for the 0 Series? Let us know in the comments how supply chain security factors into your decision.