As several major economies seek to reduce the number of diesel and gasoline vehicles on their roads, Honda and other automakers are looking to develop electrification strategies that will allow them to remain competitive well into the future.
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Honda plans to invest around 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 worldwide by 2030.
In a statement Tuesday, the company said about 3.5 trillion yen will be used for research and development costs, with 1.5 trillion yen for investments.
Honda said it will target EV production volume of over 2 million units per year by 2030. The total budget for R&D spending during this period would be about 8 trillion yen, or about $63.9 billion, it said.
In terms of production, Honda said it will try to set up what it calls a “dedicated EV plant” in the Chinese cities of Guangzhou and Wuhan. The company said it is also planning “a dedicated electric vehicle production line” in North America.
On the battery front in North America, the company is said to be “sourcing Ultium batteries from GM. Separately, Honda is exploring the possibility of forming a joint venture company for battery production alongside GM.”
Just last week, Honda and GM announced that they would be developing a line of affordable electric vehicles based on a new global platform.
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As several major economies look to reduce the number of diesel and gasoline vehicles on their roads in the coming years, Honda and other automakers are looking to develop electrification strategies so they can keep up with the new regulations and remain competitive.
Last month, for example, Ford outlined plans to launch three new passenger EVs and four new commercial EVs in Europe by 2024, with the company saying it would be selling over 600,000 EVs per year in the region by 2026.
In March 2021, Volvo Cars announced it would become an “all electric car company” by 2030.
Elsewhere, the BMW Group has announced that by 2030 at least 50% of its deliveries will be fully electric vehicles.
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 plans to electrify is Mercedes-Benz, which previously said it would “go fully electric by the end of the decade when market conditions allow.”
On Monday, the company held an ESG conference for analysts and investors. Among other things, they want to cover more than 70 percent of their energy needs with renewables by 2030.
This will be achieved through the “expansion of solar and wind power” at the company’s own locations and the conclusion of further power purchase agreements.
In an interview with CNBC’s Annette Weisbach this week, Ola Kallenius, CEO of the Mercedes-Benz Group, explained some of the thinking behind his company’s strategy.
“The good thing about investing in renewable energy, particularly renewable energy in high-yield areas, is that many of these options are actually cheaper than fossil fuels when you look at the penny per kilowatt hour once they’re up and running.” he said.
Investing in renewable energies, Kallenius added, is “good business”.