Honda presents first fully-fledged BEV plan

Japanese OEM Honda has announced a vertically integrated battery manufacturing plan that it says will reduce the cost of its EV cells by 20pc as it ramps up a North American supply chain by 2026.

The OEM, which is materially behind global competitors in the EV race, recently announced an $11bn investment in a North American value chain based around an upcoming manufacturing facility in Canada.

"Honda will establish a competitive business structure with an aim to reduce overall production cost by approximately 35pc," Honda says, adding that it "already has a positive outlook to secure enough batteries for the planned production of approximately 2mn EVs per year".

The news comes out of a corporate update issued to investors, and although the update was largely a summation of previously announced plans, the presentation of a coherent EV strategy is certain to reassure analysts who may have feared Honda being left behind as electrification gathers pace.

But the firm has now upped its target for its 2030 sales share from 30pc to 40pc all-electric, meaning it has heightened the mountain it must climb to reach that ambition. In the business update, however, the automaker reiterated its plan to invest around ¥10trn ($64bn) releasing 30 new BEV models globally by 2030 in an effort to make up ground.

The Honda 0 Series models will be first introduced in North America in 2026, then rolled out globally. A total of seven models will be launched globally by 2030 across a range of segments.

The firm has already showcased an electric sedan concept, called the Saloon, as well as a electric van model, with the former set to be a flagship vehicle for the BEV-laggard OEM.

But questions remain over the market suitability of these product choices, as among the developments that Honda says it is introducing with its new BEV products is an extra-thin battery pack, along with a platform designed for low vehicle height, very much a break from the prevailing popularity of bulkier SUVs in the North American market.

But with plans to bring out 30 new BEVs in coming years, Honda should be able to address multiple market segments as demand dictates, leaving the primary challenge as the race to bring its battery supply chain online.

"In the US, in 2025, the joint venture EV battery plant with LG Energy Solution will begin production with a capacity of 40GWh/yr of batteries... building a solid value chain with its partner, which will have the largest scale in North America," Honda says.

But Honda being late to the party puts a lot of pressure on the automaker to produce appealing BEVs with its firs attempt. Stopgap converted ICE vehicles like those produced in US players' Ford and GM's first generation cycles have proven unsuccessful, and, perhaps as a aresult, Honda is increasing its emphasis on R&D for its all-important first BEV platform.

"As for the R&D spending, it is going to be the highest ever. As we said now, ¥1trn spending for that would include the upcoming electrification related to our model development expenditures," CFO Eiji Fujimura said on the company's quarterly call this week.