Japanese auto giant Honda aims to expand electric vehicles, spends billions on R&D

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As several major economies seek to reduce the number of diesel and gasoline vehicles on their roads, Honda and other automakers are trying to develop electrification strategies that will keep them competitive in the future.

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Honda plans to invest about 5 trillion yen ($39.9 billion) in electrification and software technologies over the next 10 years, with the Japanese auto giant aiming to launch 30 electric vehicle models globally from here 2030.

In a statement on Tuesday, the company said about 3.5 trillion yen will be spent on research and development, including 1.5 trillion yen for investment.

Honda said it would target an electric vehicle production volume of more than 2 million units per year in 2030. Its total budget for R&D expenditure in that period would be around 8 trillion yen, or about $63.9 billion, he said.

As for production, Honda said it would seek to set up what it calls a “dedicated electric vehicle factory” in the Chinese cities of Guangzhou and Wuhan. The company said it also plans “a dedicated electric vehicle production line” in North America.

On the battery front in North America, the company is to “procure Ultium batteries from GM. Separately, outside of GM, Honda is exploring the possibility of forming a joint venture for battery production.”

Just last week, Honda and GM announced they would be developing a series of affordable electric vehicles based on a new global platform.

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As several major economies seek to reduce the number of diesel and gasoline vehicles on their roads in the coming years, Honda and other automakers are trying to develop electrification strategies to enable them to keep up with new regulations and stay competitive.

Last month, for example, Ford announced plans to roll out three new passenger electric vehicles and four new commercial electric vehicles in Europe by 2024, with the company saying it expects to sell more than 600,000 electric vehicles a year. in the region by 2026.

In March 2021, Volvo Cars announced plans to become an “all-electric car company” by 2030.

Elsewhere, BMW Group has said it wants fully electric vehicles to make up at least 50% of its deliveries by 2030.

Such targets will put these companies in competition with Elon Musk’s Tesla, which produced more than 305,000 vehicles in the first quarter of 2022.

Another automaker with electrification plans is Mercedes-Benz, which has previously said it “will be ready to go all-electric at the end of the decade, when market conditions allow.”

On Monday, the company hosted an ESG conference for analysts and investors. Among other things, he said he wants to cover more than 70% of his energy needs with renewable energy by 2030.

It would achieve this, he said, by “deploying solar and wind power” at its own sites and entering into more power purchase agreements.

In an interview with CNBC’s Annette Weisbach this week, Ola Kallenius, Chairman of the Board of Mercedes-Benz Group, laid out some of the thinking behind his company’s strategy.

“The good thing about investing in renewables, especially renewables in high-efficiency areas, is that if you look at the cent per kilowatt hour once you’re up and running, a lot of those options are actually less expensive than fossil fuels. energy,” he said.

Investing in renewables, Kallenius added, was “good business.”

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