Caixin
Oct 14, 2021 04:21 PM
BUSINESS

Honda Pledges to Only Sell Electric Vehicles in China After 2030

A driver takes a Honda e:N Series electric vehicle for a test drive in Tokyo on June 17. Photo: VCG
A driver takes a Honda e:N Series electric vehicle for a test drive in Tokyo on June 17. Photo: VCG

(Bloomberg) — Honda Motor Co. Ltd. is doubling down on the world’s biggest car market, pledging that all models it introduces in China after 2030 will be electric as Chief Executive Officer Toshihiro Mibe pushes ahead with the Japanese automaker’s goal of ditching combustion engine cars globally by 2040.

Honda on Wednesday said it will introduce 10 electric vehicles (EV) under its “e:N Series” range within five years, with two models, the e:NS1 and e:NP1, set to go on sale next year from Dongfeng Honda Automobile Co. Ltd. and GAC Honda, the automaker’s joint venture companies in China, respectively.

New, dedicated EV production plants will also be built at GAC Honda and Dongfeng Honda, starting in 2024, and Honda eventually expects to export its e:N Series models from the nation, according to Wednesday’s statement. In addition, a strategic partnership with Contemporary Amperex Technology Co. Ltd., now the world’s largest maker of EV batteries, will be strengthened, Honda said. The two companies signed an agreement to cooperate on R&D in July last year when Honda bought a stake of around 1% in CATL.

Having a strong foothold in China is a prerequisite for Honda to achieve its 2040 carbon-neutral target, said Takeshi Miyao, an analyst at Carnorama. “This is the best scenario for Honda to expand its push to EVs,” he added, noting that while Honda has an alliance with American giant General Motors Co., China is the more advanced EV market.

Honda will face stiff competition, however. Toyota Motor Corp. and Nissan Motor Co. Ltd. are also in China, with Toyota planning 15 battery models by 2025 and Nissan already saying it will only sell electric and hybrid models by that date.

Tesla Inc.’s Shanghai factory, meanwhile, now produces more EVs than its one in Fremont, California. Tesla also reported record China shipments this week, delivering 56,006 cars in September for domestic purchase and export. And China’s EV sector is increasingly dominated by homegrown brands like Nio Inc. and Xpeng Inc., with European brands such as BMW AG and Volkswagen AG struggling to win over local consumers.

Still, EVs in China are on a steep growth trajectory. Figures from the nation’s Passenger Car Association showed deliveries of new-energy vehicles, which include EVs and plug-in hybrids, soared 202% from a year earlier to 334,000 units last month.

“We see strong sales momentum for new-energy vehicles going forward,” PCA Secretary General Cui Dongshu said on Tuesday. McKinsey & Co. predicts the share of EVs in China will climb above 70% of new car sales by 2030, underscored by robust customer demand and a charging network that’s much more advanced than many Western nations.

Globally, Honda has said it wants to have EVs or fuel-cell vehicles comprise 40% of overall sales by 2030, 80% by 2035 and 100% by 2040.

“To achieve these targets speedily and steadily, in China, after 2030, Honda will no longer introduce any new gasoline-powered models and will electrify all new models coming to market,” it said on Wednesday.

The carmaker’s China push will also involve creating sales areas dedicated to the e:N Series at around 1,200 Honda dealerships around the country. Honda is also planning to launch e:N dealerships in major cities that will only sell the electric models.

“This strategy adds evidence to Mibe’s statement” of going all electric by 2040, said Seiji Sugiura, a senior analyst at Tokyo Tokai Research Center. “The question is: Where does Honda’s uniqueness lie?”

Contact editor Michael Bellart (michaelbellart@caixin.com)

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