TOKYO – Honda Motor Co., in the midst of a radical corporate makeover, said it will invest 5 trillion yen ($39.91 billion) over the next 10 years in electrification as it rolls out 30 full electric vehicles globally and builds production capacity for 2 million EVs annually by 2030.
In announcing the new push on Tuesday in Japan, Honda said it will also shift its business away from non-recurring hardware sales toward recurring sales of services that combine hardware and software.
Honda said the 5 trillion yen dedicated to electrification and software constitutes the lion’s share of the total r&d budget of 8 trillion yen ($63.86 billion) allotted over the same period.
The latest announcement builds on a string of initiatives CEO Toshihiro Mibe is taking to make the lineup at Japan’s No. 2 automaker completely gasoline-free by 2040.
Earlier this month, Honda announced it would team up with General Motors to to sell millions of co-developed “affordable” EVs starting in 2027. And last month, Honda said it would partner with Japanese electronics giant Sony Corp. to market co-developed EVs from 2025.
Honda, which sells about 4.5 million vehicles a year worldwide, has a long way to go before going pure BEV. To date, it has sold only 32,649 battery-electrics, cumulatively, since marketing its first, the Honda EV Plus, in 1997. Honda sold almost half those EVs, 14,324 units, in 2021 alone.
Honda has made a much bigger dent with hybrids, a segment it helped pioneer with the Insight. It has sold 3.91 million cumulatively over the years, including 561,165 gasoline-electrics in 2021.
The limited-run EV Plus, a squat three-door micro car, was Honda’s first EV, but the battery-powered version of the low-selling Clarity sedan was the first to be marketed in the U.S.
Today, its only global all-electric offering is the Honda e urban runabout. Honda has sold 9,226 of the subcompact hatchbacks in Europe and Japan through the end of 2021, including 4,171 units last year. Honda also sells three locally-focused EV models in the China market.
As a mid-sized player on the global stage, Honda needs the help of friends. For a long time, it has circled wagons with General Motors on a range of projects, from hydrogen fuel cell technology to electric vehicles. But Mibe has been actively courting new partners.
Partnerships with GM and Sony can been seen as a bridge to the time when Honda develops its own next-generation EV platforms and advanced solid-state battery systems. Cooperating buys time for Honda by giving it quicker access to product for sale and help on technology.
Mibe said the new venture with Sony will be separate from the Honda brand and its existing electric vehicle strategy. The plan to share an EV platform with GM for the North American market, for instance, will stay on track and is important as a mass market play, he said.
The vehicles developed by Honda and GM, mostly compact crossovers, will be based on a new global electric architecture powered by GM’s Ultium battery technology and use jointly created advanced battery technology. Plans to sell millions could make the pair global EV leaders.
The companies have a North American alliance dating to 2020, in which GM agreed to help Honda build EVs on its existing Ultium battery platform. That collaboration is already on track to deliver two crossovers in 2024, the Honda Prologue and a counterpart EV from Acura.
Phasing out ICE
Mibe plans to phase out the company’s famed internal combustion engines by 2040 on the road to transforming Honda into a carbon-neutral power and mobility provider.
Honda is planning to introduce its own dedicated EV platform, called e:Architecture, and solid-state batteries in the second half of the 2020s.
Mibe calls solid-state batteries a “game-changer,” and Honda plans to deploy those power packs in new models from around then. It is already redeploying engineers from the company’s internal combustion engine business to battery development.
Honda has said it plans to build a pilot line for solid-state batteries this year.
In an interview with Automotive News last autumn, Mibe said the electrification push would require “investment of billions and billions.”
Bigger plans
Outside of electrification of its automobile lineup, Honda is embarking on a wider makeover.
It is developing autonomous vehicles, in part with GM’s Cruise, under a mobility-as-a-service enterprise. Last September, Honda said it will branch into electric vertical take-off and landing, or eVTOL, aircraft with the aim to commercialize the craft by 2030, and then break the bonds of earth all together by developing small, reusable rockets that can put satellites into low-earth orbit.
Honda also confirmed last fall it had already conducted combustion tests of its prototype rocket.
Another new focus area will be avatar robots – machines with arms, hands and fingers that motion-capture real human movement to “make virtual mobility possible.”
“Existing automobile OEMs are not necessarily the ones playing key roles in such innovation,” Mibe said. “I feel the focus shifting toward new players from different industries and startups, which take up challenges without fear of failure.”
Mibe added: “In this reality, Honda will not just stand by and watch. We want to be the one taking initiative to bring about transformation.”