Honda to procure EV batteries from China, S. Korea manufacturers
17:06 JST, January 30, 2022
Honda Motor Co. plans to procure batteries for its electric vehicles from Chinese and South Korean manufacturers, so it can transport them from near the production bases, The Yomiuri Shimbun has learned.
In the United States — one of Honda’s three key markets along with Japan and China — it will further reduce procurement costs by purchasing EV batteries together with General Motors Co., with which it has a partnership, according to the plan obtained by The Yomiuri Shimbun.
The Japanese carmaker is also expediting the development of its own next-generation batteries, which will enable longer driving distances.
Honda will announce the plan as early as February, according to several company sources.
The company has set a goal of making all of its new vehicles EVs or fuel cell vehicles by 2040. To achieve this, Honda will need to secure a large number of batteries at a low cost.
However, Chinese and South Korean companies dominate the top 10 spots in terms of global market share for car batteries, with the exception of third-ranked Panasonic Corp.
The current mainstream lithium-ion batteries are heavy and are at risk of igniting, resulting in high transportation costs. It is important for battery factories to be located near EV production bases, but Panasonic has close ties with Toyota Motor Corp. and U.S. EV giant Tesla.
For this reason, Honda has decided to rely for the time being on Chinese and South Korean manufacturers with large production volumes, according to the sources.
The company will also continue to develop all-solid-state batteries, which are viewed as the next generation of batteries, aiming to put them to practical use in the latter half of the 2020s. If this is realized, the automaker will hopefully pursue a shift to these batteries.
For the North American market, Honda plants in the United States will receive battery supplies from LG Energy Solution of South Korea, which ranks second in global market share.
“Building a joint battery plant with LG in the United States is one option,” said a Honda executive.
The company will jointly develop EVs with General Motors and plans to launch sport-utility vehicles and small and midsize vehicles by 2029.
In China, the world’s largest auto market, Honda will procure batteries from China’s Contemporary Amperex Technology Co. (CATL), which has the largest market share.
Honda plans to launch 10 EV models in China by 2026. It will also build two factories dedicated to EV production in Wuhan and elsewhere in 2024.
In Japan, Honda will purchase batteries from Chinese battery maker Envision AESC Japan Ltd., likely from a plant scheduled to start operating in Ibaraki Prefecture in 2024.
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