Honda said it would shine $ 40bn in electric cars for decades to come, but stopped throwing its full weight behind battery-powered cars, as it bet its hybrid cars will dominate in the very future.
While the company became the first carmaker in Japan to announce the phasing out of petrol cars last April, Honda has only one EV model on the market, behind 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 car manufacturers Toyota and BMW.
“We need to take into account multiple factors, such as the living environment and the penetration rate of renewable energy, instead of just switching to electric cars,” said Toshihiro Mibe, Honda’s CEO who took over the role in April last year.
Mibe claims that Honda’s hybrid technology, which combines a smaller petrol or diesel engine with a battery, would lead the company for decades to come. “We will end conventional engines, but we will still focus on hybrids, and it will be our strength in 2030 or even in 2035,” he said.
The automaker outlined plans to make the most of its ties 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 2 million a year. Honda shares did not respond to a call for comment.
Honda announced last week that it, along with GM, would develop millions of affordable EVs for North America and China with production planned for 2027.
Battery supply is a growing problem for Honda, as automakers around the world race to secure supplies to increase production. “How they source EV batteries is far more important than how much they invest in EVs,” said Sanshiro Fukao, a senior fellow at the Itochu Research Institute.
While the company is catching up with global rivals, “Honda under Mibe is increasingly moving away from its own production, and attracting battery suppliers should be the top priority for any automaker today,” he added.
The Japanese automaker said it would use GM’s Ultium battery in North America and was considering setting up a joint venture with another unknown player to produce batteries for use in EVs.
In China, Honda will buy batteries from CATL, the largest global battery group in the world, 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 the consulting firm Tokai Tokyo Research Institute, said while the announcement showed Honda’s commitment to EVs, “the stock market is still skeptical.”