Honda Motor has signed a preliminary agreement to establish a new joint venture in Canada with South Korea’s POSCO FUTURE M to produce battery cathode materials for battery electric vehicles (BEVs) to be built in North America.

The automaker last night formally announced a C$15bn (US$11bn) investment to build a BEV plant in Alliston, Ontario with capacity for 240,000 units per year, along with a battery plant with capacity of 36 GWh per year, with operations scheduled to begin in 2028.

Posco has established itself as a leading supplier of battery materials with battery makers including Samsung SDI, LG Energy Solution and Ultium Cells among its key customers.

Honda and Posco began discussions a year ago and the memorandum of understanding (MoU) signed this week allowed for more detailed discussions in coming months with the two companies aiming to sign a formal joint venture agreement before the end of 2024.

Posco said cathode materials produced by the JV would be used in Honda vehicles made in Canada and the US.

Cathode materials are typically a blend of minerals such as lithium, cobalt, nickel and manganese, and account for a significant proportion of the cost of BEV battery cells.

The joint venture with Posco would aim to provide Honda with a stable supply of high quality cathode materials for its North American EV batteries.