Honda Motor Co. and South Korean battery maker LG Energy Solution Ltd. will spend $4.4 billion to build a new battery plant in the U.S. as the Japanese carmaker seeks to phase out fossil-fuel vehicles completely by 2040.

The facility will have an annual capacity of about 40 gigawatt-hours with mass production slated to start at the end of 2025, Honda said Aug. 29 in a company filing. The duo will set up a joint venture this year in which Honda will hold 49% stake by investing $1.7 billion. Construction is expected to start by early 2023.

The location of the plant is not decided. Bloomberg reported in June that Ohio is a front-runner, and the Japanese firm already has car-making plants there.

Carmakers around the world are scrambling to build electric car or EV battery plants in North America by partnering with Asian battery makers. Panasonic Holdings Corp., which supplies electric car batteries to Tesla Inc., is in talks to invest $4 billion in a battery plant in the U.S., the Wall Street Journal reported last week. Korean battery makers also have a slew of plans for battery plants in the U.S., constructing four for General Motors Co., two for Stellantis NV and three for Ford Motor Co.

Honda meanwhile plans to spend 5 trillion yen ($36 billion) on its push into EVs over the next decade by launching some 30 new models, one of the most aggressive expansions of electrification in Japan. The new plant will produce pouch-type cells for Honda and Acura’s EVs.

“Honda is working toward our target to realize carbon neutrality for all products and corporate activities the company is involved in by 2050,” Honda CEO Toshihiro Mibe, said in Aug. 29’s statement. “Aligned with our longstanding commitment to build products close to the customer, Honda is committed to the local procurement of EV batteries, which is a critical component of EVs. This initiative in the U.S. with LG Energy, the leading global battery manufacturer, will be part of such a Honda approach.”

Automakers outside of the U.S. are also facing a new local law on energy and tax policy called the Inflation Reduction Act, which requires them to assemble EVs in the U.S. and reduce dependence on China when it comes to the use of minerals in batteries in order to secure a maximum $7,500-per-car subsidy. With the exception of Nissan’s Leaf, no other Japanese EV model would qualify for subsidies under the new rules.

South Korea’s trade minister Lee Chang-yang said Aug. 29 he will seek cooperation with Japan and European nations to ease requirements on EV and battery makers.