Japanese automaker Honda Motor Co will build a new $4.4 billion lithium-ion battery plant in the US.

The unit will be built in cooperation with Korean battery manufacturer LG Energy Solution Ltd, the two companies announced yesterday. Their partnership comes at a time when battery manufacturers are looking for ways to boost US production. Consumer shifts to electrification and the purchase of electric vehicles are expected to boost demand for batteries. Washington’s decision to continue to impose stricter rules and make tax breaks more selective is expected to play a decisive role.

The location of the new production has not yet been determined. However, according to two people familiar with the matter, reports have already been confirmed that Honda is seriously considering an option with Ohio, where the company’s main US manufacturing facility is located. Both companies aim to achieve an annual production capacity of approximately 40 gigawatt hours, with batteries available exclusively at Honda’s facilities in North America to meet the energy needs of Honda and Acura electric vehicles. At the same time, the two partners are expected to establish a joint venture before the plant is built. Production is expected to begin around early 2023, with large-scale serial production scheduled for late 2025.

Ohio Gov. Mike DeWine said the local government is working with Honda and LG “to make sure they choose Ohio for a new electric battery plant.” An announcement of the location of the new plant will be made in the next few weeks, sources briefed on the matter said. The US government is promoting policies to attract more investment in electric vehicles and batteries in the US.

US President Joe Biden signed into law in August a bill that would provide $430 billion in funding for climate action, health care, and tax credits. This law excludes from tax credits electric vehicles of companies manufactured outside of North America.

Ali Zaidi, the White House’s deputy climate adviser, praised Honda and LG’s “major investment” and highlighted the key role played by climate and infrastructure legislative initiatives.

U.S. Energy Secretary Jennifer Granholm tweeted that the administration is “bringing back domestic battery manufacturing so Americans have well-paying jobs that are fueling the electric vehicle revolution.” Notably, the state of California announced last week that all new cars sold in the state from 2035 must be either electric or hybrid.