Daily Management Review

Honda CEO Says Company Wiling To Join New Alliances For Reducing EV Costs


Honda CEO Says Company Wiling To Join New Alliances For Reducing EV Costs
Japanese auto company Honda Motor Co was open to making new alliances and partnerships for making electric vehicles profitable, said the company’s new chief executive on Friday.
"If through an alliance Honda can accomplish early what it should aim to be, then we'd be willing to form an alliance," Toshihiro Mibe, who was appointed as the CEO in April, said at a press conference when he was questioned about his views of global alliances on electrification.
The comments by Mibe underscore the current pressure that the global auto industry is in for sharing of technology as well as costs to meet demands for green vehicles. Mibe took over as the chief of the second largest auto company of Japan at a time when there is a growing demand and urgency among auto companies for developing technologies for designing and production of electric vehicles (EVs) and autonomous driving.
In 2024, two jointly developed large-sized EV models in North America, using General Motors Co’s Ultium batteries, would be introduced by Honda and its alliance partner General Motors Co, the two companies have said. The partners also plan to launch a series of new models which feature a new EV platform dubbed 'e:Architecture'.
Partnership in autonomous vehicles as well as on fuel-cell vehicle (FCV) technology already exists between the two companies and they are looking out at other ways to expand their alliance.
By 2040, the ratio of EVs and FCVs is aimed to be increased to 100% of all sales, according to the target set by Honda, the company has said.
Mibe said, once the products are out in the market, there will be a rapid drop in the price of electric vehicles, just like home appliances.
"Building an alliance will become a huge direction in terms of increasing the number of electric vehicles, considering how electrification is not commercially feasible right now," he added.
Honda is traditionally known for manufacturing fuel-efficient internal-combustion engines and its first mass-produced all-battery vehicle was launched by the company in August last year.
Mibe said the production of next generation batteries for EVs could set Honda apart in the electrification race.
A combined effect of shutting down a number of its unviable manufacturing facilities, including its factories in the United Kingdom, Turkey and Japan, is the high possibility of an improvement in the profitability of its car business in the next fiscal year, according to the expectations of the auto maker, said the Honda chief.
The operating income margin for Honda for its motorcycles was at 13 per cent and at 1 per cent for its cars last year.
Mibe said that the challenge for shifting to electric powered vehicles is viewed as an opportunity for Honda to conduct a review of its existing product lineup as well as for improving profitability, and added that the company also wants to make use of customer data for a new digital service or business.