Japanese car giant Honda targets EV expansion, earmarks billions for R&D

Honda plans to invest around 5 trillion yen ($39.9 billion) in electrification and software technologies over the next 10 years, with the Japanese automotive giant aiming to launch 30 electric vehicle models worldwide by 2030.

In a statement Tuesday, the company said approximately 3.5 trillion yen would go toward research and development expenses, with 1.5 trillion yen focused on investments.

Honda said it would target an EV production volume of over 2 million units per year in 2030. Its total budget for R&D expenses in this timeframe would amount to roughly 8 trillion yen, or approximately $63.9 billion, it said.

When it comes to production, Honda said it would look to set up what it called a “dedicated EV plant” in the Chinese cities of Guangzhou and Wuhan. The firm said it was also “planning for a dedicated EV production line” in North America.

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

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

With several major economies looking to cut the number of diesel and gasoline vehicles on their roads in the years ahead, Honda and other carmakers are attempting to develop electrification strategies to enable them to keep up with new regulations and remain competitive.  

Last month, for example, Ford outlined plans to roll out three new passenger electric vehicles and four new commercial EVs in Europe by 2024, with the company saying it expected to sell over 600,000 EVs per year in the region by 2026.

In March 2021, Volvo Cars said it planned to become a “fully electric car company” by the year 2030.

Elsewhere, BMW Group has said it wants fully electric vehicles to represent 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 carmaker with plans for electrification is Mercedes-Benz, which has previously said it “will be ready to go all-electric at the end of the decade, where market conditions allow.”

On Monday, the firm held an ESG conference for analysts and investors. Among other things, it said it wanted to cover over 70% of its energy needs with renewables by 2030.

It would achieve this, it said, by “rolling out solar and wind power” at its own sites as well as entering into more power purchase agreements.

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

“The good thing with investing in renewables, especially renewables in areas that have a high yield, is that if you look at the cent per kilowatt-hour once you are up and running, many of those options are actually less expensive than fossil-based energy,” he said.

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