Honda plans $64bn investment in electric vehicles over next 10 years

Japan’s Honda Motor Company plans to spend $64bn on research and development over the next decade, the company said on Tuesday, laying out an ambitious target to roll out 30 electric vehicle models globally by 2030.

Its goals include producing 2-million electric vehicles a year by 2030, aiming to gain share in the fast-growing market for electric vehicles, led by Tesla, while Japanese carmakers risk falling behind European and US rivals.

“As far as resource investments over the next 10 years go, we’re going to invest about ¥8-trillion in research and development expenses,” said Honda CEO Toshihiro Mibe, referring to the equivalent to $64bn. 

Honda said it wanted to establish a dedicated electric vehicle production line in North America, where it will procure Ultium batteries from General Motors. It is also considering a separate joint venture company for battery production there, apart from its GM partnership.

Honda said last week that it and GM would develop a series of lower-priced electric vehicles based on a new joint platform, expanding on plans for GM to begin building two electric SUVs for Honda starting in 2024.

The push towards electric vehicles prompted the group to hunt for partners to optimise costs and share technology.

“This puts them in good company with a lot of other makers that have made big battery announcements ... ultimately the world is going to leave internal combustion engines behind,” said CLSA analyst Christopher Richter.

“Given their size, I am glad they are co-operating with General Motors.”

Most of the ¥8-trillion investment is earmarked for electrification and software technologies. That includes about ¥43bn on a demonstration line for production of solid-state batteries, targeted to start in spring 2024.

Honda and other Japanese vehicle manufacturers have long said that even as they go electric they will not give up on older, hybrid technology.

Proponents of hybrids point to the many markets, especially in emerging countries, where infrastructure to support battery electric vehicles will be a long time coming.

“By no means is this the end of hybrids and the replacement of all hybrids with EVs,” said Mibe.

“We will develop our current hybrids and use them as a weapon in our business.”

Honda’s plan to make 2-million EVs a year was within expectations, said analyst Seiji Sugiura of Tokai Tokyo Research Institute.

This is because Toyota has already targeted sales of 3.5-million such vehicles by 2030 and Nissan has aims for half its cars to be electric by the end of the decade.

Just a year into the job, Honda boss Mibe has already made bold pronouncements. Honda said in March that it would team up with Sony to develop and sell electric vehicles, aiming to start selling the first model in 2025. Last year, Mibe unveiled a 2040 target for electric and fuel cell vehicles to make up all of global sales.

Reuters