Honda to slash BEV budget

HONDA is the latest major global automotive manufacturer to put the brakes on battery electric vehicle (BEV) development, cutting spending in response to slower than expected uptake.

Speaking at a business briefing in Tokyo this week, Honda director, president, and representative executive officer Toshihiro Mibe said the company was re-evaluating its BEV plan “postponing” three trillion yen (approximately $A32 billion) out of a previously allocated 10 trillion yen expenditure on BEV development up to 2030.

“As for the plan announced last year to invest 10 trillion yen in resources to pursue its electrification strategy, Honda decided to reduce the investment amount by three trillion yen, to a total of seven trillion yen, over the period through the FY2031 (fiscal year ending March 31, 2031), based on its decision to postpone the project to establish a comprehensive EV value chain in Canada and change the timing to construct dedicated EV production plants,” he explained.

“For small-size mobility products including passenger vehicles, Honda believes that electric vehicles are the optimal solution for achieving carbon neutrality from a long-term perspective. Based on this belief, Honda made the strategic decision to make a major shift toward the popularisation of EVs and has been making progress with various initiatives.”

Heading toward 2030, Mr Mibe said Honda will improve profitability through continuous expansion of its motorcycle business, cost reduction effects in automobile business associated with the adoption of the next-generation e:HEV system and platforms, and an increase in unit sales of HEV models, and will keep making progress toward achieving the company-wide ROIC target of 10 per cent for the FY2031 (fiscal year ending March 31, 2031).

Honda will realign its automobile electrification strategy through enhancing the competitiveness of BEV and HEV models with the core focus on application of intelligent technologies and will strengthen its business foundation through the reassessment of the powertrain portfolio.

While shifting focus to HEVs, Honda will maintain its drive towards “intelligent mobility” and carbon neutrality for all products and corporate activities with the company targeting 100 per cent electrified passenger vehicle sales by 2040, carbon neutrality by 2050.

Honda remains in collaborative discussions with countries and other manufacturers including strategic alliances with Nissan and Mitsubishi for cost sharing arrangements and the sharing of intelligent technologies.

But BEV sales targets were falling behind “necessitating a realignment of Honda’s automotive strategy that places more emphasis on new generation, lower cost and more efficient hybrid (HEV) technology along with a greater focus on the North American, Japanese and Chinese markets,” said Mr Mibe.

“We have new generation of low cost HEV products coming in 2027 that will give Honda a wider range of models and will help us achieve 2.2 million HEV sales in 2030,” he added.

In addition to targeting greater battery efficiency and a 50 per cent cut to manufacturing costs, the company’s new e-HEV system will feature weight reduction through battery development and parts commonality between models to achieve cost competitiveness and increase sales.

The new generation e:HEV technology replaces existing technology first implemented in 2019 and developed before that and will be applicable to a wider range of vehicles including larger models destined for the US market to include entry level and lifestyle models and is a further advancement of the company’s original two-motor hybrid system and platforms.

Both small-size and mid-size e:HEV systems will gain efficiency and greater range through engine and powertrain efficiency optimisation that sees the hybrid system utilising an advanced next-generation platform providing a boost to driving stability and further weight reduction and a new electric AWD drive unit that realises precise and responsive motor control yielding an expected 10 per cent fuel economy improvement.

“Honda will bring 13 new HEV models to market by 2027 and will strive to build a new EV brand featuring our new ‘H’ mark logo,” continued Mr Mibe.

“In the meantime, the environment surrounding the automobile industry is changing day by day.

“Uncertainty in the business environment is increasing, due particularly to the slowdown in the expansion of EV the market due to several factors, including changes in environmental regulations, which had been the premise for the widespread adoption of EVs, as well as changes in trade policies of various countries.

“In order to maintain its competitiveness in such a business environment and continue to help and inspire people through its mobility products and services, Honda must create new value not only through electrification but also with enhanced application of intelligent and then offer such value to a broader range of customers in more accessible and affordable ways.”

In conjunction Honda’s environmental aspirations with new gen e:HEVs, Honda is in partnership with Chinese company Momenta to develop next generation Advanced Driver Assist Systems (ADAS) that it hopes will result in zero traffic collision fatalities by 2050.