In a move signaling a significant shift towards electric vehicles (EVs), Honda Motor Co., Ltd. announced today it will double its investment in electrification and software development to a staggering $65 billion over the next ten years, ending in fiscal year 2030 (FY2030). This ambitious plan reflects Honda’s determination to catch up with competitors in the rapidly growing electric car market.
Honda CEO Toshihiro Mibe unveiled the new strategy at a press conference, highlighting a total investment of 10 trillion yen ($64.88 billion) earmarked for electrification and software development. This marks a significant increase from the 5 trillion yen ($32.44 billion) originally pledged in April 2022.
“The future of mobility is electric,” declared Mibe. “This substantial investment underscores Honda’s commitment to becoming a leader in the EV revolution. We are confident that by focusing on electrification and software development, we can deliver innovative and exciting new vehicles to our customers around the world.”
The announcement comes as Honda faces mounting pressure from established automakers like Tesla and a wave of Chinese EV manufacturers like BYD. These players have aggressively rolled out new electric car models, capturing significant market share. Even within Japan, Honda trails its domestic rival Toyota, which has made significant strides in hybrid and electric vehicle technology.
Honda’s new strategy aims to address these challenges head-on. The company plans to leverage its expertise in internal combustion engines and combine it with cutting-edge battery and software technologies. This focus on software development is crucial, as electric vehicles become increasingly reliant on sophisticated software for features like battery management, driver assistance systems, and autonomous driving capabilities.
Beyond the headline-grabbing investment figure, Honda also outlined specific goals for cost reduction. The company aims to slash battery procurement costs in North America by more than 20% by 2030. In addition, production expenses are targeted for a 35% reduction, partly achieved through increased parts integration. These cost-cutting measures are essential for Honda to remain competitive in the EV market, where profit margins are currently lower compared to traditional gasoline-powered vehicles.
The announcement coincides with Honda’s recent launch of the “Honda e: Series,” a lineup of battery-powered vehicles that marks the company’s official entry into the mass-market EV segment. The first model, the Honda e: Prototype, was unveiled in January 2024 and is expected to go on sale later this year.
Analysts believe Honda’s increased investment in electrification is a positive step, but caution that the company faces an uphill battle. “Honda has a long and successful history in the automotive industry,” said industry analyst Michiyo Tanaka. “However, they are starting from behind in the EV race. The success of this strategy will depend on their ability to develop competitive electric vehicles and bring them to market quickly.”
Only time will tell if Honda’s $65 billion investment will be enough to propel the company to the forefront of the electric vehicle revolution. However, one thing is clear: Honda is serious about electrification and is making a significant commitment to secure its future in the rapidly changing automotive landscape.
