One year has passed since Toshihiro Mibe, global CEO of Honda, announced at his inaugural press conference that “Honda will strive to realize carbon neutrality for all products and corporate activities Honda is involved in by 2050.” What are Honda’s initiatives toward realizing carbon neutrality, considering its broad range of products? And how will Honda approach electrification of its automobile products? The following summarizes Honda’s approach to the automobile electrification business presented at a press briefing on April 12, 2022.
The April 2021 CEO inaugural press conference was met with all kinds of feedback, including the astonishment of people who thought Honda is abandoning the internal combustion engine.
One year later, in his press briefing, Mibe reviews Honda’s initiatives of the past several years, discusses the results of strengthening existing businesses, and new areas that will represent an expansion of Honda’s main businesses.
Honda Director, President and Representative Executive Officer
Joined Honda in 1987. After serving as the head of Honda R&D, he assumed his current role in April 2021. In Honda R&D, Mibe was involved in a wide range of research and development, primarily in the field of automobile engines.
Reviewing Honda 2021
“Over the past several years, Honda has been pursuing various initiatives toward the direction to solidify existing businesses and to prepare for new growth, and these initiatives have begun showing positive results in the areas of products, businesses and the development of advanced technologies which will lead us to new growth.”
Mibe first spoke of the corporate direction to secure a solid footing for automobile electrification. He cited strong products and strengthening of the business structure as initiatives to solidify existing businesses.
In 2021, the all-new Vezel and all-new Civic were very well received and, in the meantime, the company began adopting Honda Architecture that enables layout integration and component commonization for its vehicle platforms. Streamlining took place globally, reducing the total number of variations at the trim and option level for each of the global models.
Mibe believes that the improvement of the business structure will generate investments in electrification and preparation for new growth.
“The three new areas, eVTOL, avatar robotics and challenges in the field of space technology, all require core technologies that are an extension of technologies Honda amassed in its existing businesses, and I believe these three areas are an expansion of our original business as a mobility company.”
eVTOL realizes comfortable intercity mobility. Avatar robot enables virtual mobility. Challenges in the field of space technology include circulative renewable energy systems that enable human activities on the Moon and small rockets.
As with motorcycles and automobiles, these three new areas will be pursued to create more free time for people, increase the time and space where people take active roles, and to remove constraints on people’s freedom of mobility. Honda not only aims to expand the range of human living and activities, but to become the power to change society.
Beyond Electrification: Honda’s Carbon Neutrality
Carbon neutrality by 2050. Why would Honda, which has developed combustion engines throughout its existence, set such a goal and aim for electrification? Honda believes that it is Honda’s responsibility as the world’s leading power unit manufacturer.
“Honda is a mobility company providing a wide range of products from motorcycles, automobiles and power products, to outboard motors and aircraft, which in total, makes Honda the world’s largest power unit manufacturer, with annual sales of approximately 30 million units.”
“To continue serving as a source of power that supports people around the world who are trying to do things based on their own initiative, Honda strives to realize “the joy and freedom of mobility,” and we want to do it by seeking “zero environmental footprint.”
“In order to do that, we will work toward carbon neutrality of our mobility products and their power source – the power unit.”
Electrification is often considered the foremost carbon neutrality initiative for automakers, but for Honda, which also offers other forms of mobility products such as motorcycles, aircraft and outboard motors, this is not the case.
Mibe emphasizes that “we need to take a multifaceted and multidimensional approach, not the mere replacement of engines with batteries.”
“We must take into consideration the diverse range of mobility products we offer, the diverse ways our customers use our products and their living environment, and also the availability of renewable energy in their markets. Moreover, we have to see things from the viewpoint of the product lifecycle, and we also have to have the perspective of how we can contribute to the total amount of energy and energy efficiency for society as a whole.“
Swappable batteries will be suitable for commercial commuters such as motorcycles and rickshaws in India. Hydrogen fuel cells should be utilized for heavy vehicles that require long travel distances. Honda is exploring the optimal carbon neutral power sources for each type of mobility.
Mobility services will increase the efficiency of mobility for society as a whole. By building a connected platform which collects and analyzes data from each mobility product, Honda aims to enhance convenience and efficiency for all of society.
Automobile electrification is one vital piece in Honda’s multifaceted and multidimensional approach to achieving carbon neutrality.
Realizing Automobile Electrification
To accelerate the realization of its vision, Honda made organizational changes in April 2022.
Electrified products and services, battery, energy, Mobile Power Pack, hydrogen and software/connected technologies that connect all core areas have been spun off from their respective product-based business operations and combined under the newly created Business Development Operations. Honda will budget approximately 8 trillion yen for its research and development expenses over the next ten years. For two key target areas, electrification and software, Honda plans to devote approximately 5 trillion yen over the next 10 years, which will include investments.
Shinji Aoyama, in charge of the new Business Development Operations, provided the roadmap to automobile electrification.
Honda Senior Managing Executive Officer
Joined Honda in 1986. After serving as head of the North American region, he was assigned to be in charge of electrification in July 2021. Aoyama became the head of the newly formed Business Development Operations in April 2022 as well as Senio.
“As you are aware, the most important challenge in this EV era is the global procurement of batteries. We have two basic approaches.”
“First, Honda will ensure stable procurement of liquid lithium-ion batteries in each region by strengthening external partnerships.
“And second, from the late 2020s Honda will accelerate its independent research and development of next-generation batteries and bring the technologies in-house.”
Aoyama introduced such a multi-phased approach of battery procurement toward the future, and emphasized Honda’s commitment to “build EV batteries close to the vehicle facility” is key to the procurement of liquid lithium-ion batteries in the short term.
“As to the procurement of liquid lithium-ion batteries, we set respective procurement policies for each of the major markets, based on our commitment to “build EV batteries close to the vehicle facility” in order to maintain our competitiveness from the perspective of the product lifecycle as well.”
“For North America, Honda will procure Ultium* batteries from GM. .Separately, aside from GM, Honda is exploring the possibility of creating a joint venture company for battery production. In China, Honda will further strengthen its collaboration with CATL.
“In Japan, Honda has agreed to procure batteries for mini-EVs from Envision AESC.”
* Ultium: Next-generation battery developed by GM
Aoyama also commented on progress Honda is making in the development of next-generation batteries.
“As already announced, Honda is working on the development of all-solid-state batteries. We have already conducted technology and production verification in the lab and determined target performance.”
“To establish production technology in-house, we decided to build a demonstration line, to enable us to work on the design of production lines, including production processes, and secure a competitive advantage of our mass-production batteries in performance, cost and safety.”
“We plan to invest approximately 43 billion yen toward constructing a demonstration line in Sakura city, Tochigi, with a goal to make it operational in Spring 2024. We will accelerate research aiming to adopt our next-generation batteries to our models in the second half of the 2020s.”
All-solid-state batteries are viewed as the most promising next-generation batteries, with the ability to increase range and decrease charging time.
Honda is aiming to adopt its all-solid-state batteries to its EV models in the second of the 2020s.
Honda’s EV Roadmap
Honda also announced plans for EV models tailored to each region for introduction in what can be considered the dawn of the popularization of EVs, from now through the second half of the 2020s.
“In North America, we will introduce mid- to large-size EV models being codeveloped with GM. In 2024, we will launch the all-new Honda Prologue as already announced, and one large-size All Electric SUV model from the Acura brand.”
“In China, where EVs are becoming popular ahead of other regions, Honda will leverage the unique characteristics of the advanced EV market and introduce our EVs speedily through local development. As announced last year, we will introduce a total of ten new EV models by 2027.”
“In Japan, where hybrid vehicles are significantly more popular than any other regions, we will first introduce a commercial-use mini-EV in early 2024, to begin popularizing EVs in the professional and heavy-use area, such as a delivery business.”
“For the popularization of EVs, we will strive to offer this commercial-use mini-EV in the 1-million-yen price range. In the meantime, while monitoring market factors such as availability of renewable energy for the entire infrastructure, we will make the timely introduction of personal-use mini-EVs and EV SUVs.”
Why would Honda begin introduction of EVs in Japan with commercial-use mini-EVs? The decision was made in light of the unique characteristics of the Japanese market. To popularize EVs, Honda will start with mini-vehicles which are the majority of commercial-use vehicles in Japan, and then develop an EV platform for small-size vehicles, which Honda plans to expand from Japan into Asia.
As EVs become more popular in the second half of the 2020s and beyond, Aoyama spoke of plans to shift from a region-specific approach to introducing the best EVs from a global perspective.
As a vital part of this shift, in 2026, Honda will begin adopting Honda e: Architecture, a new EV platform that combines the hardware and software platform. By blending hardware and software, Honda will break away from non-recurring business and stay connected with its customers through its products, making it possible to continue offering various services. By expanding this connection beyond automobiles to other types of mobility products, Honda will strive to offer added value only Honda can provide to its customers.
Aoyama also mentioned Honda’s recently announced plans to explore an EV business joint venture with Sony.
“We position this as our “challenge to expand the concept of mobility,” to explore the new value of mobility, that a mobility company could not do alone. By combining the strengths of both companies, we are aiming to introduce software-defined and high-value added EVs in 2025.”
Aoyama also spoke of plans to introduce, through its alliance with GM, affordable EVs with cost and range as competitive as those of gasoline-powered vehicles, starting from North America in 2027.
Finally, Aoyama summed up Honda’s EV release strategy.
“Through these initiatives, Honda plans to launch 30 EV models globally by 2030, with annual production volume of more than 2 million units. This will include a full lineup from commercial-use mini-EVs to flagship models.”
“As for EV production operations that enable such volume, we have announced plans to build a dedicated EV plant in Wuhan, China. And we plan to build another one in Guangzhou. In addition, we are planning for a dedicated EV production line in North America.”
“As with battery production, building EV products close to the customer will be a source of our competitiveness from the perspective of the product lifecycle. So, we will study the production capacity needed in each key market.”
As for charging stations, indispensable for the popularization of EVs, Honda will explore options in accordance with the situations in each region and country. In North America, Honda is considering proactively investing in charging stations.
Realizing Combined Solution Business through Software / Connected Technologies
In addition to electrification, another area Honda will place emphasis on is software and connected technologies.
Aoyama spoke of a future in which Honda’s products, motorcycles, automobiles, power products, outboard motors, aviation and mobility services, are connected to the network.
“Honda’s strength is the greater value we offer not only with each of our products, but when various Honda products become linked and realize a “cross-domain” connectivity. And that is our goal.”
“To achieve this, we need to implement our “combined solution business” in which we position our electrified products as “terminals” to connect energy and information stored in each product with our users and society. This will offer new value.”
“To this end, we will work on establishing a cross-domain connected platform, which will be the key component.”
“At this time, Honda’s current competency in the areas of software and connected technologies were combined into the newly-created operation. From here forward, to accelerate development, we will strive for a significant enhancement of our capabilities in the areas of electrification technologies, including batteries, as well as software and connected technologies. This will include strengthening human resource recruiting from outside our company.”
Honda has been demonstrating its strengths in the areas of mobility hardware. It is now aiming to build upon its strengths, and transform itself from non-recurring hardware sales business to recurring business which offers constant updates of software installed to its products. Through this transformation, Honda will be able to continuously refresh and advance its mobility products even after customers have made their purchases.
Next, Kohei Takeuchi, Executive Vice President of Honda, detailed the company’s financial strategies to support its new challenges.
Despite a decline in automobile sales due to the impact of the COVID-19 pandemic and semiconductor shortages, Honda’s return on sales (ROS), an indicator of a sound business operation, remains strong.
Takeuchi announced the amount of research and development expenses and investments to be put into electrification and software, and resource allocation into new growth areas such as eVTOL, avatar robots, and challenges in the field of space technology.
Adding Honda FUN to Carbon Neutrality
Finally, Mibe once again spoke to the media in closing.
“While taking on challenges toward carbon neutrality and electrification, Honda always wants to offer FUN for its customers,” he said, introducing plans for future sports models.
“We are currently exploring the global introduction of two sports models, specialty and flagship models, which will inherit the ‘joy of driving’ and embody Honda’s inalterable sports mindset and distinctive characteristics.”
“We will be developing these models without compromise, so that we can fulfill the expectations of our fans and customers.”
“We will continue working harder by setting ambitious goals for our challenge toward carbon neutrality through electrification, for racing and for the development of sports models.”