【EV Vision Report】On April 12, the Honda brand released its medium- and long-term development plan for the electrification business to the world. Over the next 10 years, Honda will invest about 8 trillion yen in research and development, and a total of about 5 trillion yen in electrification and software to accelerate the electrification process. By 2030, 30 pure electric vehicles will be launched in the global market, with plans to produce more than 2 million vehicles per year. The Company will invest approximately JPY 43 billion in an all-solid-state battery demonstration production line and start operations in the spring of 2024. From the business with hardware sales as the main body, to the business expansion of providing customers with various services and value through products that combine hardware and software, we are committed to the transformation of the business portfolio.
Initiatives related to the electrification business
In order to consolidate the foundation of its business, Over the years, Honda 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.
The automotive business system has steadily improved, and as of now, the number of derivatives of global models has been reduced to less than half from 2018 (the goal is to reduce it to one-third by 2025).
In terms of production costs of automobiles, we will accelerate this initiative by "consolidating the business foundation" by reducing the cost by 10% compared with 2018, and investing it in "electrification" and "preparation for future growth.".
In order to achieve carbon neutrality through all-domain products and corporate activities by 2050, Honda is committed to promoting the carbon neutralization of power sources for its products in all fields as the world's largest powertrain manufacturer with an annual production capacity of 30 million units in the motorcycle, automotive, power products, outboard and aircraft sectors. To achieve this, Honda believes that a multi-faceted, multi-faceted 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 society as a whole by connecting their CONNECT platform.
At the level of organizational structure change, Honda will separate the "electric products and services, batteries, energy, mobile power packages, hydrogen fuel" with future core competitiveness from the existing organizational structure divided by motorcycles, automobiles, and power products, and the "software and networking field" associated with this, and integrate them into a new organization "Business Development Headquarters". This increases flexibility and enhances cross-domain collaboration of products.
Initiatives related to the electric vehicle business
An important issue in the era of pure electric vehicles is the global battery procurement program, and Honda will promote related work based on the following two points:
1. At this stage: Ensure stable procurement in each region by strengthening external partnerships for liquid lithium-ion batteries.
North America: In addition to GM, which is purchasing "Aoteneng platform" batteries from GM, we are studying the establishment of a joint venture for battery production.
China: Further strengthening cooperation with CATL.
Japan: Procuring batteries from Envision AESC for light electric vehicles.
2. The second half of the 2020s: Accelerate the independent research and development of a new generation of batteries
It was decided to build a demonstration production line for all-solid-state batteries currently under development.
The company plans to invest approximately JPY 43 billion and start operations in the spring of 2024.
In the future, it is planned to be used in models launched in the second half of 2020s.
Honda has also developed a specific launch plan for pure electric vehicles:
1. From now until the second half of 2020s: Launch products according to the market characteristics of each major region
North America: Launch of two medium- and large-sized pure electric vehicles jointly developed with General Motors in 2024 (Honda brand: new SUV "Prologue" and Acura brand: SUV model).
China: Launch 10 pure electric vehicles by 2027.
Japan: After launching a commercial light pure electric vehicle with a price of about 1 million yen in the first half of 2024, the company plans to launch a light electric vehicle and an SUV pure electric vehicle for individuals in due course.
2. The second half of 2020s: The world has entered the period of pure electric vehicle popularization, and the highest quality electric vehicles will be launched worldwide.
From 2026 onwards, the product will be launched with "Honda e: Architecture", which is a pure electric vehicle-specific platform that combines various hardware and software platforms.
Through the cooperation with GM, after 2027, it will launch commercially available Volkswagen models that are as competitive as traditional fuel vehicles in the North American market regardless 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 the production system of pure electric vehicles, in addition to Wuhan in China (which belongs to Dongfeng Honda), Honda also plans to build a special plant for electric vehicles in Guangzhou (owned by Guangqi Honda). In addition, Honda plans to build a dedicated production line for pure electric vehicles in North America.
Strengthen the field of software and networking
In terms of electrification, Honda's goal is to push the boundaries of individual products and provide greater value through the cross-domain interconnection of various products.
To this end, Honda positions electric mobility scenarios and products as terminals, and since the technology and framework that connects the energy and information accumulated in each product with users and society are crucial, Honda will focus on creating a cross-domain interconnected platform to create value.
In order to accelerate its development in the future, Honda will strengthen the use of external resources and significantly improve its development capabilities in the field of batteries and other electric vehicles, as well as in the field of software and networking. In addition, in this field, Honda will actively carry out cooperation, alliances and venture capital between different industries to play a synergistic role.
At present, Honda's business is entirely based on the sale of hardware, and in the future, while promoting electrification, Honda will integrate hardware and software, expand the contact with customers and business scope, and thus transform the business portfolio. In addition, after 2030, Honda will strengthen its compound solutions business and business in new areas.
Develop fiscal programs to support business transformation
At present, Honda's business is completely based on the sales of hardware, and in the future, while promoting electrification, Honda will integrate hardware and software, expand the contact with customers and business scope, and transform the business portfolio. In addition, after 2030, Honda will strengthen its compound solutions business and new businesses.
In addition to consolidating the business foundation due to the severe business environment caused by the COVID-19 pandemic and the shortage of semiconductors, Honda has also improved its business structure through comprehensive fee reductions. Honda believes that through unremitting efforts, it is possible to achieve the previously set medium- and long-term goals, so that the return on sales (ROS) can reach more than 7%. In addition, net cash balances remained at a good level of 1.9 trillion yen (as of the end of the third quarter of fiscal 2021).
In the future, Honda will invest about 8 trillion yen in research and development funds. Approximately JPY 5 trillion (R&D expenditure of JPY 3.5 trillion and JPY 1.5 trillion) is expected to be invested in electrification and software. And Honda plans to invest about 1 trillion yen over the next 10 years to "prepare for future growth," including "new fields" and "resource recycling."
For startups with advanced technologies and business models with future potential, Honda actively invests about 10 billion yen a year to expand its technology and business scope.
Based on the idea of external financing on demand, green bonds totaling US$2.75 billion were issued in March this year. The funding will be used to develop and produce zero-carbon vehicles, such as pure electric vehicles and fuel cell vehicles, to further accelerate the realization of an "environmental zero-load society."
Honda said that in the process of challenging carbon neutrality and electrification, it will always uphold the original intention of continuing to provide customers with "FUN", and launch two sports models, special edition and flagship version, to the world, even in the era of electrification, these two products still inherit Honda's unique handling fun, condensing Honda's consistent sportsmanship and unique personality.
Written in the end: Honda's medium- and long-term development plan released this time further determines and improves the development direction of the Honda brand in the next 10 years, and further increases the development and promotion of pure electric vehicles while further reducing traditional fuel models as planned, thereby promoting the further electrification of the Honda brand.