TOKYO – Honda Motor Co., aiming to make electrified vehicles account for two-thirds of its global sales by 2030, agreed today to form a joint venture with Japanese supplier Hitachi Automotive Systems to develop, produce and sell the motors that make those vehicles run.
The company, to be established in July, will be 51 percent owned by Hitachi Automotive Systems and 49 percent owned by Honda. The partners are investing 5 billion yen ($44.5 million) in the project. The joint venture does not yet have a name but will be headquartered in Japan.
The venture will make some of the motors at Hitachi Automotive plants in Kentucky and in China, to address what is expected to be rising demand for electrified vehicles in those markets.
The alliance comes as Honda breaks with its traditional go-it-alone strategy and seeks new partners to help it shoulder the spiraling costs of next-generation technologies. Tougher emissions regulations and safety standards are inflating the costs of fuel-efficient drivetrains and collision avoidance systems, pressuring automakers to share investments.
Finding an outside source for electric motors relieves Honda of the r&d strain of developing its own in-house. It also chips away at what has been a source of pride for the Japanese automaker. Engineers have touted their Honda-developed electric motors in hybrid cars such as the Insight, for instance, by saying in-house work is a natural for a company dubbed Honda “Motor” Co.
Honda currently makes its own motors. While Honda will farm more of that work to Hitachi Automotive, it is expected to keep some motor production, especially for its fuel cell vehicle.
Honda is the only major Japanese automaker that does not have some kind of strategic partnership or share crossholding with another Japanese competitor. Reaching out to suppliers is one way it can tap new technological trends while protecting its independence.
The accord was announced Tuesday by Honda CEO Takahiro Hachigo and Hideaki Seki, president of Hitachi Automotive Systems. Hitachi Automotive, a specialist in electronics, safety systems, batteries and motors, ranks No. 26 on the Automotive News list of top 100 global suppliers.
Hachigo said the motors would be used in plug-in hybrids, standard hybrids and electric vehicles. Honda is introducing all electric and plug-in version of its Clarity sedan in the U.S. this year, but the new motors aren't expected to be ready in time for those nameplates.
Hachigo said spreading the cost capital investment was a key driver behind the Hitachi tie up, given the volume of production and expense of building plants. He declined, however, to say when the new motors would reach market or what kind of scale the venture targets.