On April 12, Japanese carmaker Honda said that it will invest Y5tn ($40bn) into electric vehicles (EVs) over the next 10 years, but expects hybrid vehicles to continue playing a prominent role in its growth until at least 2030.

Honda’s plans to allocate about Y3.5tn to research and development (R&D) expenses into electrification and software technologies, plus a further Y1.5tn to R&D investments.

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Central to transition

Despite these lofty EV plans, Honda executives believe that hybrids, which combine a small internal combustion engine with a battery, will “continue to evolve” and be central to the transition away from conventional fossil fuel powered vehicles.

“It is not the case that it’s the end of hybrids and we will all switch to EVs [...] We will continue to rely on hybrids as one of our powerful weapons [for growth],” said Toshihiro Mibe, the CEO of Honda, in a press briefing on April 12.

Honda said it will launch 30 EV models on a global scale by 2030, with a goal to have a production volume of more than 2 million units each year. It also aims for EVs to make up 40% of global sales by 2030. To achieve this, the company plans to build dedicated EV plants in Guangzhou and Wuhan, China, and another dedicated EV production line in North America. 

Shinji Aoyama, a senior managing executive officer at Honda, highlighted in the press briefing the importance of global battery procurement and development in the carmaker’s EV plans. 

“We will accelerate our next generation battery development independently at our own R&D [facilities] to establish our own technology after the late 2020s,” said Mr Aoyama.

The company said it would procure Ultium batteries from General Motors (GM) in the North America region. Separate from its tie-up with GM, Honda is “exploring the possibility” of creating a joint venture (JV) for battery production, thereby following in the footsteps of other global automakers like Stellantis and Toyota

In China, Honda will continue to source batteries from CATL, the world’s largest battery manufacturer, while Envision AESC will supply the company domestically in Japan.

Next generation batteries

Honda is also intending to invest about Y43bn to build a demonstration production line for all-solid state batteries. These new generation batteries are being developed by several original equipment manufacturers (OEMs) and have the potential to be cheaper and easier to charge than conventional lithium-ion batteries.

“Various OEMS are constantly making announcements [about solid state batteries]. Naturally we want to come up with an all-solid-state battery which is competitive,” said Mr Aoyama.

Honda has been trying to expand its EV commitment through other partnerships. On top of its tie-up with GM, the company announced in March that it would establish a JV with Sony to produce EVs, with first sales due to start in 2025. 

fDi Markets data since 2016 shows that Honda has made significantly less foreign greenfield investments into EV-related activities compared to its peers. Toyota has meanwhile announced over 20 FDI projects into EVs with an estimated capital expenditure of over $10.5bn.