On April 12, Honda announced its latest initiatives in the pure electric vehicle business area. Honda will focus on the transformation of its business portfolio from a business with hardware sales as the main body to a business that provides customers with services and value through products that combine hardware and software.
Points for speed reading
1. From the existing organizational structure of motorcycles, automobiles and power products, the newly established business development headquarters focusing on electrification, software and networking has been established. About 5 trillion yen (about 253.6 billion yuan) is expected to be invested in electrification and software over the next 10 years.
2. Launch an all-solid-state battery demonstration production line with an investment of about 43 billion yen (about 2.18 billion yuan), which is scheduled to start in the spring of 2024.
3. At Dongfeng Honda's Wuhan plant and Guangqi Honda's Guangzhou plant, we will reduce the production line of electric vehicles and launch 10 pure electric vehicles in the Chinese market by 2027.
4. From 2026, the product using "Honda e: Architecture" will be launched, which is a pure electric vehicle platform that combines various software and hardware platforms.
5. By 2030, it plans to launch 30 electric vehicles from light commercial to flagship level in the world, with an annual output of more than 2 million vehicles.
6. Honda will launch two sports models in the era of electrification, special edition and flagship version.
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Initiatives related to the electrification business
As of now, Honda's global model derivatives have been reduced to less than half from 2018 (the goal is to cut it to one-third by 2025).
In terms of production costs for automobiles, we aim to reduce our production costs by 10% compared to 2018, and we will accelerate this initiative by "consolidating the business foundation" and investing in "electrification" and "preparation for future growth."
In order to achieve carbon neutrality by 2050 through all-domain products and corporate activities, Honda is committed to promoting the carbon neutralization of power sources in all fields as a powertrain manufacturer with a total annual output of 30 million units in the motorcycle, automobile, power product, outboard and aircraft sectors. 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 society as a whole by connecting the CONNECT platform.
From the existing organizational structure divided by motorcycles, automobiles, and power products, Honda separated the "electric products and services, batteries, energy, mobile power packages, hydrogen fuels" with future core competitiveness, and the "software and networking field" associated with this, and merged them into a new organization " Business Development Headquarters". This increases flexibility and enhances cross-domain collaboration of products.
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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.
At this stage: by strengthening external partnerships for liquid lithium-ion batteries, we will ensure stable procurement in each region.
North America: Procurement of "Ultium platform" batteries from General Motors (GM). In addition to General Motors (GM), a joint venture for battery production is being established
China: Further strengthening cooperation with CATL
Japan: Procuring batteries from Envision AESC for light electric vehicles
Second half of 2020s: Accelerate the independent research and development of a new generation of batteries, and decide to invest about 43 billion yen in the construction of a demonstration line for all-solid-state batteries currently under development, which will be launched in the spring of 2024.
The specific pure electric vehicle launch plan is as follows.
From now until the second half of the 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", Acura brand: SUV model)
China: Launch of 10 pure electric vehicles by 2027
Japan: After launching commercial light-duty all-electric vehicles with a price range of about 1 million yen in the first half of 2024, the company plans to launch light-duty electric vehicles and SUV-type pure electric vehicles for individuals in due course
The second half of 2020s: The world enters the period of pure electric vehicle popularization, and high-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 dedicated platform that combines various hardware and software platforms.
Through the partnership with General Motors (GM), after 2027, commercially available Volkswagen models will be launched in the North American market that are as competitive as conventional fuel vehicles in terms of cost and range.
Through these initiatives, it is planned to launch 30 electric vehicles worldwide, from light commercial to flagship, with an annual production of more than 2 million by 2030.
In terms of the production system of pure electric vehicles, in addition to Wuhan in China, Honda also plans to build a special plant for electric vehicles in Guangzhou.
It also plans to build a dedicated production line for pure electric vehicles in North America
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Strengthen the field of software and networking
In terms of electrification, Honda aims 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 because 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.
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Develop fiscal programs to support business transformation
Honda's current business is entirely based on the sale of hardware, and Honda will transform its business portfolio by integrating hardware and software while promoting electrification, expanding its contact with customers and business scope. In addition, after 2030, Honda will also strengthen its compound solutions business and new areas. In order to achieve these changes, Honda has been making efforts to "consolidate the foundation of its business".
In addition to consolidating its business foundation, Honda has also improved its business structure through comprehensive fee reductions due to the severe business environment caused by the COVID-19 pandemic and semiconductor shortages. Honda believes that through unremitting efforts, it is possible to achieve the medium- and long-term goals previously set, 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).
Approximately 8 trillion yen will be invested in research and development. Approximately 5 trillion yen (R&D expenditure of approximately 3.5 trillion yen and investment of approximately 1.5 trillion yen) are expected to be invested in electrification and software.
The company plans to invest about 1 trillion yen over the next 10 years to "prepare for future growth," including "new areas" and "resource recycling."
For startups with future potential for advanced technologies and business models, we are actively investing about 10 billion yen a year to expand our 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."
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Sport models
In the process of challenging carbon neutrality and electrification, Honda will launch two sports models in the era of electrification, special edition and flagship version, to the world.
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