JEFFERSONVILLE, OH—South Korean battery maker LG Energy Solution has entered into a partnership with Japanese carmaker Honda Motor to build a new battery factory here.

Construction of the joint venture battery factory, tentatively named L-H Battery Co., is slated to begin this year with the aim of finishing by the end of 2024. Production of lithium-ion battery cells could begin in 2025. 

The factory will have a production capacity of around 40 gigawatt-hours annually with all the battery output dedicated for use in Honda’s electric vehicles in North America.

The two companies have committed to investing $3.5 billion in the facility, a project that could help create more than 2,000 jobs. Their overall investment is expected to reach $4.4 billion.

Experts say the joint venture was likely spurred by the Inflation Reduction Act, signed by U.S. President Joe Biden in August. Under its guidelines, electric cars must be assembled in North America to qualify for tax credits, a move that has prompted various automakers and battery manufacturers to bring new investments to the United States.