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Honda Ditches Plan for Tackling EVs Alone, Embraces Partnerships

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【Summary】Honda once planned to pursue electric vehicles on its own, but has quickly learned that the strategy won’t work and is now looking for help.

Original Vineeth Joel Patel    Jul 25, 2021 9:00 PM PT
Honda Ditches Plan for Tackling EVs Alone, Embraces Partnerships

Making the switch to electric vehicles is a massive undertaking for automakers. It's something of a blind jump, as electric vehicles aren't profitable and the market for EVs doesn't exist in a few countries. The majority of automakers have decided to tackle the issue with some help, entering into partnerships with one another to split the costs of investing in electric powertrains and batteries. Others, like Honda, have decided to go through the process alone. According to an article from Bloomberg, the Japanese automaker found that decision to be a mistake and is now looking for more partnerships.

Honda Looking To Minimize Risk

Aside from its partnership with General Motors, which will see the two automakers jointly develop two new Honda EVs and work on hydrogen fuel cells, Honda has been on a mostly independent path toward electric cars. Under CEO Toshihiro Mine, this is changing. Honda is the world's largest manufacturer of engines and has a lot of risk as the rest of the industry moves toward EVs. To better its position in the future, the automaker will take the shift seriously, which requires partnerships.

Speaking to the outlet, Mibe stated that the automaker is open to working with other companies when it comes to electric vehicles. "Even if we make the electric cars, it'll be extremely hard for Honda to develop software alone," said Mibe. "Honda won't hesitate to form alliances with companies that are strong in their field if that creates value promptly."

The issue, as Mibe outlined, is that traditional automakers don't have the know-how on how to manufacture all of the components that go into electric vehicles. From batteries to software, EVs require a different type of thinking and manufacturing compared to a vehicle with an internal combustion engine. Alliances, like the one between Volkswagen and Ford, are becoming more commonplace. The main reason for partnerships, is that they reduce the overall risk for everyone included.

Honda To Ditch Gas Engines By 2040

"It will be extremely risky for Honda to push the move alone," said Mibe. "It's meaningful to form alliances, mass-produce and lower costs to make our business sustainable."

Going forward, we expect Honda to enter into more partnerships to get its electric vehicle push going. Unlike other Japanese automakers, Honda recently announced that it plans to stop producing internal combustion engines by 2040. To do that, Honda will have to work with other automakers and companies outside of the auto industry.

"We still want to discuss with various companies in various fields," he said. "I believe in creating new value by becoming partners with non-auto companies, so we haven't narrowed them down.

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