Honda said it would pour $40bn into electric vehicles over the next decade, but stopped short of throwing its full weight behind battery-powered vehicles as it bet that its hybrid cars would dominate in the near future.
While the company became Japan’s first automaker to declare the phaseout from gasoline cars last April, Honda has only one EV model in the market, trailing Volkswagen and other global players.
It said on Tuesday it would rely on its hybrid models with a petrol-electric system until the infrastructure was ready to support more EVs on the roads, in a move that follows the hedging logic of other carmakers Toyota and BMW.
“We need to take into account multiple factors, such as the living environment and the penetration rate of renewable energy, rather than simply switching to electric vehicles,” said Toshihiro Mibe, Honda’s chief executive who assumed the role last April.
Mibe stressed that Honda’s hybrid technology, which combines a smaller petrol or diesel engine with a battery, would lead the company over the next decade. “We are ending conventional engines but we will still focus on hybrids, and it will be our strength in 2030 or even in 2035,” he said.
The carmaker outlined plans to make the most of its tie-ups with General Motors and Sony to break into the affordable EV market. It said it would launch 30 EV models by 2030 and produce more than 2mn a year. Honda’s shares did not react to the announcement.
Honda announced last week it would jointly develop with GM millions of affordable EVs for North America and China with production scheduled in 2027.
Battery supply is a growing issue for Honda as carmakers around the world race to secure stocks to increase production. “How they source EV batteries is much more important than how much they invest in EVs,” said Sanshiro Fukao, a senior fellow at the Itochu Research Institute.
As the company plays catch-up with global rivals, “Honda under Mibe is increasingly moving away from in-house production, and luring battery suppliers should be the largest priority for any carmaker today”, he added.
The Japanese carmaker said that in North America it would use GM’s Ultium battery and it was considering setting up a joint venture with another undisclosed player to produce batteries to use in EVs.
In China, Honda will source batteries from CATL, the world’s largest global battery group, while in Japan it will buy batteries from Envision AESC, the main battery supplier for the Renault-Nissan alliance, for compact electric vans in commercial use.
Seiji Sugiura, a senior analyst at advisory company Tokai Tokyo Research Institute, said while the announcement showed Honda’s commitment to EVs, “the stock market still has scepticism”.