Honda Motor Co. Chief Executive Officer Toshihiro Mibe is betting on new battery technology to drive down costs and develop electric versions of its smaller, affordable cars — but before that happens, the Japanese carmaker will sell larger and more expensive EVs.
(Bloomberg) — Honda Motor Co. Chief Executive Officer Toshihiro Mibe is betting on new battery technology to drive down costs and develop electric versions of its smaller, affordable cars — but before that happens, the Japanese carmaker will sell larger and more expensive EVs.
Mibe, who is in the US this week to break ground on a new $4.4 billion lithium-ion battery plant in rural Ohio, said in an interview that a different technology — solid-state batteries — will eventually help make EVs, which can cost 40% more to build than fuel-powered cars, more accessible.
Honda is seeking to catch up with peers outrunning it in the race to dominate a crucial market that is seeing a faster transition away from traditional cars and trucks. The automaker has teamed up with Sony Group Corp. to develop EVs and has pledged to sell only electrified vehicles by 2040.
“We are aware vehicle prices are rising,” Mibe said through an interpreter. “The electric-vehicle business is very dependent on battery costs. Through the evolution of our technology, we will try to control those costs.”
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Lithium-ion batteries use a liquid electrolyte to conduct electricity between the cathode and anode. The solid-state batteries Honda is working on would replace that liquid with more stable materials, like ceramics. That could reduce the size and cost of the battery pack and store more energy. It could also help prevent fires.
Honda is far from alone in pursuing a solid-state battery strategy. In fact, it is arguably lagging behind better-resourced peers like Toyota Motor Corp. and Nissan Motor Co. Other carmakers with solid-state ambitions include General Motors Co. and Ford Motor Co.
Significant Investment
Honda built a big following in the US by producing inexpensive and reliable vehicles, but prices for new cars have been climbing across the board. New cars and trucks with gas-powered engines cost about $50,000 on average, putting them increasingly out of reach for many consumers.
Those dynamics have helped create a chicken-and-egg problem when it comes to producing EVs with solid-state batteries. The cost to get the technology into production is high, Mibe said, so Honda needs to make sure the market is prepared before pushing ahead.
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“It takes a significant investment to produce those batteries, so we have to judge the timing, when are we going to introduce that investment to produce those kinds of batteries,” he said. “It is very difficult.”
Getting solid-state technology ready for mass consumption could take several years, and figuring out when to ramp up production will be difficult, according to Mibe. He said that Honda is developing its own solid-state program, which the company has discussed with GM, and is working on another with Korean partner LG Energy Solution, a unit of LG Chem Ltd.
Starting Bigger
In the meantime, Honda’s first electrics will be larger — and pricier — SUVs. The Honda Prologue and Acura ZDX, which will be built using GM’s Ultium EV platform, will go on sale in 2024. The Prologue is similar in size to the gasoline-powered Honda Passport, which starts at around $42,000.
Guidehouse Insights analyst Sam Abuelsamid said the Prologue will likely be priced between $50,000 and $60,000. Honda will need to get more EVs to market to remain competitive in the US and Europe, he said.
“They’re certainly not leaders,” Abuelsamid said. “A couple years ago you could get by without an EV presence because the market is so small. But it’s rapidly getting to the point where you need a presence in multiple segments to remain competitive.”
Mibe said Honda needs to start with higher-priced models to absorb production costs. After that, the company will look at developing smaller cars using its own EV platform starting in 2026. An electric Civic — the iconic small sedan that made Honda a global autos powerhouse — is years away.
“To get into value zone of Civic, you’d see an increase in those prices,” he said.
In certain markets, Honda has to push ahead with EVs regardless of cost. Mibe said Europe and California have plans to ban new internal combustion vehicles by 2035, and in China heavy incentives make electrification a requirement. The company plans 10 electric models there by 2028.
Predicting the US market is much more difficult because the charging network isn’t good enough, Mibe said.
“Charging infrastructure, it’s not at a place where it needs to be for our customers,” Mibe said. “These are country-level concerns. We have to think about those things as we move to our goal of achieving 40% EV sales by 2030. The EV market is not stable.”
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