Honda invested 400 billion yuan to transform electrification, and will use all-solid-state batteries after 2024

Economic Observer Network reporter Pu Zhenyu Gao Feichang On April 12, Honda Honda released the latest measures for the electric vehicle business in 2030. It is highlighted that in the next 10 years, about 8 trillion yen (about 405.8 billion yuan) will be invested in research and development funds, of which about 5 trillion yen (about 253.6 billion yuan) will be invested in the field of electrification and software to accelerate the electrification process; by 2030, 30 pure electric vehicles will be launched in the global market, with an annual output of more than 2 million units; and an all-solid-state battery demonstration production line will be launched. The investment is 43 billion yen (about 2.18 billion yuan) per month, and it is scheduled to start in the spring of 2024.

According to incomplete statistics from the Economic Observer Network reporter, in order to develop electrification, major automotive groups around the world have invested a lot of money. The Volkswagen Group has pledged to invest 89 billion euros (about 615.8 billion yuan) in electric vehicles and batteries by 2030 and launch millions of electric vehicles in Europe, China and North America over the next decade; Daimler plans to invest more than 60 billion euros (about 415.3 billion yuan) in 2030; BMW plans to invest a total of 30 billion euros (about 207.6 billion yuan) by 2025. General Motors plans to invest $35 billion by 2025, and Ford expects to invest $30 billion by 2025.

From the perspective of R&D investment, Honda's R&D fund of 400 billion yuan is not at the top of the industry, which shows that Japanese car companies are still relatively conservative in terms of electrification. Judging from the sales data in 2021, Honda Motor's global sales exceeded 4.5 million units and motorcycle sales of about 17 million vehicles, and eventually these businesses will achieve low-carbon new energy.

Automobiles are an important division of Honda and the focus of Honda's electrification work. For the electric vehicle business, Honda will start from both the power battery and the whole vehicle, which is also the idea that most car companies uphold. In addition, Honda will maintain its investment in the software and intelligent networking and innovative business areas.

A more secure approach to electrification

Honda's idea of developing electrification is not to electrify it completely, but to steadily advance it from the perspective of realizing the transformation of the overall automotive business. Honda said that over the years, it has been conducting its business with the principles of "consolidating the foundation of its business" and "preparing for future growth", and is gradually achieving results in various fields of products, businesses, and new technologies. So far, the automotive business system has steadily improved, and the number of derivatives of global models has been reduced by less than half compared with 2018 (the goal is to reduce it to one-third by 2025). In terms of vehicle production costs, the goal is to reduce the cost of vehicle production by 10% compared with 2018, which will help the next step of electrification.

Honda's electrification is based on the dimension of carbon neutrality in all areas by 2050. Honda said it will promote the carbon neutralization of power sources for its products in various fields as the world's largest powertrain manufacturer with an annual production volume of 30 million vehicles in the motorcycle, automobile, power products, outboard and aircraft segments. To achieve this, Honda believes that a multi-faceted, diversified solution is needed, rather than simply replacing the engine with a battery.

In addition to the electrification of vehicles, Honda also provides a variety of solutions for customers in different countries and regions, including the use of exchanged batteries and hydrogen fuel cells for different modes of travel. In addition, Honda will improve the convenience and operational efficiency of the entire society by connecting their CONNECT platform.

Honda's approach coincides with the current practice of most traditional car companies, that is, to promote carbon neutrality and electrification under the premise of ensuring the normal development of existing businesses. To this end, Honda will change its organizational structure and separate the "electric products and services, batteries, energy, mobile power packages, and hydrogen fuel" with future core competitiveness from the existing organizational structure divided into motorcycles, automobiles, and power products, and the "software and networking field" associated with this, and merge them into a new organization, "Business Development Headquarters". This increases flexibility and enhances cross-domain collaboration of products.

Power battery and the whole vehicle grasp both hands

Honda believes that the two priorities for the development of electrification are global power battery procurement and vehicle product launch.

In terms of power batteries, Honda will promote battery supply in two phases, currently purchasing from outside, purchasing "Ultium platform" batteries from General Motors in North America, and is also studying the establishment of a battery production joint venture; further strengthening cooperation with CATL in China; and purchasing batteries from Envision Power in Japan for light electric vehicles. Starting in the second half of 2020s, Honda will accelerate the self-development of batteries and decided to build a demonstration production line for all-solid-state batteries currently under development, with an investment of about 43 billion yen, which will be launched in the spring of 2024.

In the electric vehicle business, from now until the second half of 2020s, we will launch products according to the market characteristics of each major region. In North America, by 2024, two medium- and large-scale pure electric vehicles (Honda brand: new SUV "Prologue" and Acura brand: SUV models) jointly developed with General Motors will be launched; 10 pure electric vehicles will be launched in the Chinese market by 2027; and in the Japanese market, commercial light pure electric vehicles with a price of about 1 million yen (about 50,000 yuan) will be launched in the first half of 2024. It plans to launch individual-oriented light electric vehicles and SUV pure electric vehicles in due course.

By the second half of 2020s, Honda believes that the world will enter the period of pure electric vehicle popularization, when it will launch the highest quality electric vehicles in the world. Honda will launch products using "Honda e: Architecture", which is a pure electric vehicle-specific platform that combines various hardware and software platforms from 2026. Through the cooperation with General Motors (GM), after 2027, the North American market will launch a commercially available Volkswagen model that is on the same level as conventional fuel vehicles in terms of cost and range. Through the above initiatives, the company plans to launch 30 electric vehicles from light commercial to flagship levels worldwide by 2030, with an annual production volume of more than 2 million units.

In terms of production system, Honda said that in addition to Wuhan in China, it plans to build a special factory for electric vehicles in Guangzhou. It also plans to build a dedicated production line for pure electric vehicles in North America.

At present, the Chinese market is the world's largest electric vehicle market, and it is also an important market for the development of Honda electric vehicles. In China, Honda is promoting electrification through two joint ventures, Guangqi Honda and Dongfeng Honda, and the first models of the e:NP and e:NS series have both been unveiled and will be launched in the Chinese market this year. It can be seen that Honda has taken the lead in bringing its new electric architecture products to the Chinese market.

Invest in software and intelligent networking

In addition to electric vehicles, Honda will also focus on software and intelligent networking. According to the investment plan, Honda expects to invest about 5 trillion yen (about 3.5 trillion yen in research and development expenses and about 1.5 trillion yen in the field of electrification and software). Over the next 10 years, the company plans to invest about 1 trillion yen (about 50.76 billion yuan) to "prepare for future growth," including "new fields" and "resource recycling."

Honda said that the current business is entirely based on the sale of hardware, and will transform the business portfolio by integrating hardware and software while promoting electrification, expanding contact with customers and business scope.

In addition, after 2030, the composite solutions business and new areas of business will be strengthened. For startups with future potential for advanced technologies and business models, we are actively investing about 10 billion yen (about 507 million yuan) a year to expand our technology and business scope.

In the process of challenging carbon neutrality and electrification, Honda said that it will not give up the original intention of providing customers with "FUN", and launch two sports models to the world, special edition and flagship version, which are two models that inherit Honda's unique handling fun and embody Honda's consistent sportsmanship and unique personality.