Why Is Honda Turning an EV Battery Plant Toward AI Demand?

Honda Motor Co., Ltd. HMC is converting a U.S. battery plant originally intended for electric vehicle (EV) production to manufacture batteries for AI data centers, per Nikkei as cited in a Seeking Alpha article. Earlier this month, the automaker and South Korea’s LG Energy Solution began producing…

Honda Motor Co., Ltd. HMC is converting a U.S. battery plant originally intended for electric vehicle (EV) production to manufacture batteries for AI data centers, per Nikkei as cited in a Seeking Alpha article. Earlier this month, the automaker and South Korea’s LG Energy Solution began producing batteries for energy storage systems (ESS) used in data centers at their joint facility in Ohio.

Honda and LG Energy Solution formed the joint venture in 2022 to build lithium-ion batteries for EVs. But after the plant was completed in 2025, weaker-than-expected demand for electric vehicles led Honda to scale back its electrification strategy.

The company has since scrapped development of three EV models planned for the U.S. market, including one under its Acura luxury brand, reducing the need for EV battery production at the Ohio facility.

The move mirrors a broader industry trend, with automakers reallocating EV battery capacity to the fast-growing stationary energy storage market as AI data centers drive higher electricity demand.

Honda plans to begin producing hybrid vehicle batteries at the Ohio plant in 2028 after purchasing the facility’s buildings and other assets from LG Energy Solution for $2.5 billion. It will adjust production between ESS batteries and hybrid batteries based on demand and the pace of vehicle electrification. The strategy aligns with the automaker’s plan to introduce 15 hybrid models, mainly in North America, by fiscal 2029.

Hybrid EVs are expected to be the core growth area over the next several years. Honda plans to expand its HEV lineup, especially in North America, where demand remains strong and profitability is superior to EVs. Existing production lines are configured for mixed production, allowing Honda to shift capacity from canceled EV programs toward HEVs without major incremental investment. The company is also developing larger HEV models while improving cost and performance in mid-size vehicles.

HMC’s Zacks Rank & Key Picks

Honda currently has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the auto space are Geely Automobile Holdings Limited GELHY, Douglas Dynamics, Inc. PLOW and Garrett Motion Inc. GTX, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for GELHY’s 2026 sales and earnings implies year-over-year growth of 77.1% and 40.3%, respectively. The EPS estimate for 2026 and 2027 has improved 18 cents and 7 cents, respectively, over the past 30 days.

The Zacks Consensus Estimate for PLOW’s 2026 sales and earnings implies year-over-year growth of 16.7% and 31.4%, respectively. The EPS estimate for 2026 and 2027 has improved 39 cents and 29 cents, respectively, over the past 60 days.

The Zacks Consensus Estimate for GTX’s 2026 sales and earnings implies year-over-year growth of 5.6% and 20.4%, respectively. The EPS estimate for 2026 has improved 12 cents over the past 60 days, while the EPS estimate for 2027 has improved a penny over the past 30 days.

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