Japanese automaker Honda has finally decided to try and catch up with the electric vehicle transition, announcing wholesale changes to its organisation including new divisions focused on EV production and strategy.
The about face, from a company that generates a fraction of one per cent of its overall sales from electric vehicles, comes after a significant decline in its overall car sales over the last three years, and a substantial fall in its market value
“Honda will strive to further accelerate its electrification business and create new value by leveraging its broad and expanding range of mobility products and services,” it said in a statement, adding – somewhat hopefully – it aimed to serve customers with the “joy of expanding their life’s potential”.
“By further accelerating the series of initiatives Honda has been taking to transform itself through electrification and new value creation, Honda strives to remain and become even more recognized as “a company society wants to exist” in the electrified era,” its said.
Honda says that the key points of the organisational changes are the creation of electrification business development operations as well as reorganisation of regional operations and corporate functions.
Honda says it will consolidate the business strategy and BEV product development functions of automobile business and electrification-related strategy and development functions of motorcycle and power products businesses to further strengthen and accelerate Honda’s electrification business.
Honda has experienced a 23% decline in auto sales from 5.3 million in 2019 to 4.1 million in 2022, making it one of the worst performing car makers in recent years.
Adding to its woes, along with other Japanese brands Toyota and Nissan (despite the success of the Leaf), Honda has until now failed to shift its focus to the booming electric vehicle market.
Although Honda is releasing an all-electric SUV (in partnership with General Motors), its sales of EVs to date have been very low. In 2022 EVs made up just 0.35% of Honda’s total production.
The Driven’s view: With major car markets in China, Germany and the UK all rapidly shifting away from petrol and diesel powered cars, it’s going to be a challenge for Honda to scale electric vehicle manufacturing before the market shifts completely.
The announcement is welcome as it removes the ambiguity around Honda’s strategy moving forward. It also sends another signal to fellow Japanese carmaker Toyota that electric vehicles are the only way forward.
The news comes just 2 weeks after Honda announced a joint venture with LG Energy Solution to build a battery factor in the US with an annual production of 40GWh.
Daniel Bleakley is a clean technology researcher and advocate with a background in engineering and business. He has a strong interest in electric vehicles, renewable energy, manufacturing and public policy.