Summary of Honda’s automotive electrification briefing, Business News

TOKYO, April 12, 2022 – (JCN Newswire) – Honda Motor Co., Ltd. today held a press conference on its initiatives in the field of automotive electrification, with the participation of the following Honda executives:

– Toshihiro Mibe, Director, Chairman and Deputy CEO
– Kohei Takeuchi, Director, Executive Vice President and Deputy CEO
– Shinji Aoyama, Senior General Manager

Here is a summary of the briefing:

1. Honda initiative for electrification

Honda strives to be a company that serves as a source of “power” that supports people around the world who are trying to do things on their own initiative and that helps people develop their own potential. To this end, Honda strives to achieve “the joy and freedom of mobility” by pursuing a “zero environmental footprint”.

Consolidate existing businesses
Over the past several years, Honda has pursued various initiatives to “strengthen existing businesses” and “prepare for new growth” and these initiatives have begun to show positive results in product, business and new areas. technologies.

– The structure of Honda’s automotive business has steadily improved. To date, the total number of trim and option variations for global models has been reduced to less than half the number of 2018 (target: a reduction to a third by 2025).
– As for the cost associated with global automobile production, Honda is on track to achieve its goal of reducing the cost by 10%, compared to the cost recorded in 2018.

Honda will continue to accelerate its efforts to generate resources by solidifying existing businesses and investing those resources in electrification and preparing for new growth.

Unique Honda approach
As the world’s largest power unit manufacturer with annual sales of approximately 30 million units of mobility products, including motorcycles, automobiles, power products, outboard motors and aircraft, we aim to achieve carbon neutrality for all products and corporate activities in which Honda is involved by 2050, striving to eliminate carbon emissions from energy sources from a wide variety of products. To that end, Honda believes a multifaceted, multidimensional approach is needed, not a simple replacement of motors with batteries.

Including the use of replaceable and hydrogen batteries as well as the electrification of automobiles, Honda will offer a variety of solutions for all of its mobility products based on how its customers use the products in various countries and regions.

Moreover, with the connected platform, which connects all these elements, Honda will improve the convenience and efficiency of society as a whole.

Organizational changes made to strengthen the electrification activity
In the past, Honda divided its organization by products, namely motorcycles, automobiles and electrical products. However, beginning with this fiscal year, the technology areas that will become the core of Honda’s future competitiveness have been moved from their respective product-based organizations and consolidated into the newly created business development operations. These key areas are: electrified products and services, battery, energy, Mobile Power Pack, hydrogen and software/connected technologies that connect all key areas. With this change, Honda will accelerate the speed at which it can move and improve the “cross-domain” synergy effect between Honda products.

2. Initiatives for automotive electrification companies

Battery Supply Strategy
The main challenge in the era of electric vehicles is the global supply of batteries. Honda has two basic approaches to its battery supply strategy.

1) Now and for now:
Honda will ensure a stable supply of liquid lithium-ion batteries in each region by strengthening the external partnership.

– North America:
Honda will buy Ultium batteries from GM. Moreover, in addition to GM, Honda is studying the possibility of creating a joint venture for the production of batteries.
– China:
Honda will further strengthen its collaboration with CATL.
– Japan:
Honda will source batteries for the mini-EVs from Envision AESC.

2) From the second half of the 2020s:
Honda will further accelerate its independent research and development of next-generation batteries. For the all-solid-state batteries currently under development, Honda has decided to build a demonstration line, investing around 43 billion yen, with the aim of making it operational in the spring of 2024. Honda aims to adopt its next-generation batteries on the models will be introduced to the market in the second half of the 2020s.

Presentation of electric vehicles
Specific plans for the market introduction of electric vehicle models are as follows.

1) By the second half of the 2020s:
Honda will showcase products tailored to the market characteristics of each region.

– North America: In 2024, Honda will launch two mid- to large-size electric vehicle models currently being jointly developed with GM. (Honda brand: all-new Prologue SUV, Acura brand: an EV SUV model.)
– China: Honda will introduce a total of 10 new electric vehicle models by 2027.
– Japan: In early 2024, Honda will introduce a mini-EV model for commercial use in the 1 million yen price range for the first time. Next, Honda plans to introduce mini EVs and EV SUVs for personal use in due course.

2) After the second half of the 2020s:
Assuming that it will be the time for the popularization of electric vehicles, Honda will start presenting the best electric vehicles from a global perspective.

– In 2026, Honda will start adopting Honda e: Architecture, an EV platform that combines hardware platform and software platform.
– Through the alliance with GM, Honda plans to introduce affordable electric vehicles in 2027, with cost and range that will be as competitive as gasoline-powered vehicles, starting in North America.

Through these initiatives, Honda plans to launch 30 electric vehicle models globally by 2030, with a full lineup ranging from commercial-use mini-EVs to flagship models, and Honda expects a production volume of more than 2 million. units per year.

EV production
– Regarding electric vehicle production operations, in China, Honda plans to build a dedicated electric vehicle factory in Guangzhou as well as Wuhan.
– Honda is also planning a dedicated electric vehicle production line in North America.

3. Strengthening the areas of connected technologies / software

Honda strives to deliver greater value not just with each of its products, but when various Honda products are linked and achieve connectivity beyond their product areas.

The key to achieving such connectivity lies in technologies and frameworks, where Honda positions its electrified products as “terminals” and connects the energy and information stored in each product with its users and society. Therefore, Honda will work to build the cross-domain connected platform, which will create new value for its customers.

In the areas of electrification technologies, including batteries, as well as software and connected technologies, for the acceleration of its development efforts, Honda will strive to significantly improve its development capabilities, which will include the strengthening its human resources by recruiting outside Honda. .

Additionally, in these areas, Honda will proactively pursue cross-industry collaboration and alliances, as well as investment in startups.

4. Financial Strategies that Support Honda Business Transformation

While making progress in electrification, Honda will shift away from the one-time hardware sales business and work to transform the Honda business portfolio by combining hardware and software to expand connections with its customers and the range of its activities. In addition, after 2030, Honda will strengthen its combination solutions business as well as its business in new areas. To achieve such a transformation of the business portfolio, Honda has worked to consolidate its existing businesses.

Improved revenue structure
In addition to its constant efforts to solidify existing businesses, Honda has been working to reduce costs in all directions while facing a difficult business environment due to issues such as the pandemic and the shortage of semiconductors. As a result, the business structure has improved and Honda is confident that its continued efforts will adequately achieve the return on sales (ROS) of more than 7%, which had been the mid to mid-term target. Honda’s long term. Additionally, the net cash balance was 1.9 trillion yen (at the end of the third quarter ended December 31, 2021), maintaining a healthy level.

Investments in resources over the next 10 years and use of external funding

– Honda will budget around 8 trillion yen for research and development. Of all R&D areas, Honda plans to invest about 5 trillion yen in electrification and software (about 3.5 trillion yen for R&D expenditures and about 1.5 trillion yen for investments).
– For preparation for new growth, including new technology areas and resource circulation, Honda will invest about 1 trillion yen over the next 10 years.
– Honda will actively invest in startups with advanced technologies and high-potential business models at a scale of 10 billion yen per year, which will expand the range of Honda technologies and businesses.
– Based on its policy of using external financing methods as needed, Honda issued green bonds totaling US$2.75 billion in March this year. By allocating the proceeds of these green bonds to the development and production of zero-emission vehicles such as electric vehicles and FCVs, Honda will further accelerate our initiatives towards achieving a society that aims for zero environmental impact.

5. Sports models

While taking on challenges towards carbon neutrality and electrification, Honda is still passionate about delivering FUN to its customers. “Fun to drive” will be passed on to our models even in the era of electrification, and Honda will introduce two sporty models globally, a specialist model and a flagship model, which will embody universal sportsmanship and distinctive Honda characteristics.

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