Honda-GS Yuasa To Get $1.79 Billion For New Plant As Japan Pours Billions In Subsidies To Support Domestic Semiconductor, EV Battery Manufacturing

The Japanese government will provide subsidies worth $1.79 billion to Honda Motor and GS Yuasa Corp to establish factories in Japan to mass-produce lithium-ion batteries for electric vehicles, Nippon News reported.

The move comes amid a concerted effort by the Japanese government to help domestic manufacturers lagging behind Chinese and South Korean competitors.

Japan's Ministry of Economy, Trade and Industry has recently designated batteries and semiconductors as strategically critical products. It is pouring billions of dollars in subsidies to help Japanese companies regain their edge in the semiconductor manufacturing and battery storage industries.

The subsidies for the battery plant will be provided from a $2.4 billion fund set aside in the fiscal 2022 second supplementary budget.

Japan recently announced that Rapidus, a new state-supported semiconductor consortium, will get an additional $1.94 billion in assistance as a part of the government's efforts to strengthen domestic semiconductor production.

Rapidus is viewed as pivotal to Japan's all-out strategy to regain chipmaking glory by luring overseas and local semiconductor companies by designing generous financial incentives.

Honda's EV Pivot

Earlier this year, Honda Motor announced that it would establish a joint venture with GS Yuasa to develop electric vehicle batteries.

GS Yuasa, a leading Japanese battery maker focused mainly on batteries for hybrid vehicles, decided last year to enter the market for EV batteries.

Honda will use batteries from General Motors in North America and a joint venture with South Korea's LG Energy Solution. Honda will make electric models in the U.S. at its three plants in Ohio, including the Marysville plant.

The company will also collaborate with leading Chinese battery maker Contemporary Amperex Technology Co., Limited (CATL).

Honda also announced that it is investing jointly in semi-solid-state batteries (lithium-metal secondary batteries) co-development effort with SES AI Corporation (SES), an EV battery research and development company.

"Honda will begin operation of a demonstration line for the production of all-solid-state batteries in 2024, aiming to adopt its all-solid-state batteries to models to be introduced to market in the second half of the 2020s." the company said.