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In An Effort To Catch Up In The Electric Vehicle Race, Honda's CEO Is Betting On New Battery Technology

March 3, 2023
minute read

Toshihiro Mibe, the chief executive officer of Honda Motor Co., is betting that new battery technology will help drive down costs and increase the popularity of electric versions of Honda's smaller, cheaper cars, but before that happens, Honda will sell larger and more expensive electric cars. 

This week Mibe is in the US where he will be breaking ground on a $4.4 billion lithium-ion battery factory in rural Ohio. In an interview, he said that a different technology - solid-state batteries - will ultimately make electric cars more accessible, even though they can cost 40% more to build than fuel-powered cars.

The automaker is seeking to catch up with its competitors who are outrunning it in the race to dominate a market that is seeing a trend of a faster shift away from traditional cars and trucks in the near future. Sony Group Corp. has partnered with the automaker to develop EVs and has committed to selling only electric vehicles by 2040.

"As we are aware, the prices of vehicles are rising," Mibe said through an interpreter on behalf of the organization. In order to succeed in the electric vehicle market, battery costs are very important. “The advancement of our technology will enable us to control these costs through the evolution of our technology."

The cathode and the anode of lithium-ion batteries are connected by a liquid electrolyte, which conducts electricity between them. It is expected that Honda will be working on solid-state batteries that will replace the liquid inside liquid batteries with more stable materials, such as ceramics. There is a possibility that this could reduce the size and cost of the battery pack, as well as store more energy. Fires might also be prevented by using this method.

Honda is far from being the only company that is following a solid-state battery strategy. However, it can be said that it lags behind its better-resourced peers like Toyota Motor Corp. and Nissan Motor Co. Among the other carmakers with solid-state ambitions are General Motors Co. and Ford Motor Co.

Significant Investment

The Honda brand has built a strong following in the US by producing affordable and reliable vehicles, but the prices for new cars have been steadily increasing across the board. It is estimated that new cars and trucks with gas-powered engines cost about $50,000 on average, leaving them increasingly out of reach for many people.

When it comes to producing EVs with solid-state batteries, these dynamics have acted as a chicken-and-egg problem, which has led to a chicken-and-egg dilemma. Honda needs to make sure that the market is prepared before moving ahead with the technology, Mibe said. Honda is worried that the cost of getting the technology into production is high.

"It takes significant investment to manufacture these kinds of batteries, so we have to judge the timing, when are we going to introduce that investment to produce these kinds of batteries," he said. "It is a very challenging task."

The process of converting solid-state technology into mass consumption may take several years, and determining when production will ramp up will be challenging, according to Mibe. During the interview, he let us know that Honda is developing its own solid-state program, which the company has discussed with General Motors, as well as another program with a Korean partner, LG Energy Solution, a unit of LG Chem Ltd. 

Starting Bigger

It is likely that Honda will begin selling electric cars in the near future, starting with larger - and more expensive - SUVs. Honda's Prologue and Acura ZDX will go on sale in 2024 on GM's Ultium EV platform, which will be used to build the Honda Prologue and Acura ZDX. It is roughly the same size as the gasoline-powered Honda Passport, which starts at around $42,000 and is similar in price to the Prologue. 

According to Guidehouse Insights analyst Sam Abuelsamid, the Prologue is expected to be priced somewhere between $50,000 and $60,000. To remain competitive in the US and Europe, Honda will need to be able to deliver more EVs to the market, he said. 

“The group is hardly a leader,” Abuelsamid said. “The EV market was so small a few years ago that you could get by without an EV presence. However, it is rapidly becoming necessary to be present in multiple segments if you wish to remain competitive."

For Honda to be able to absorb production costs, Mibe said the company must start with more expensive models. It is expected that by 2026 the company will begin developing smaller electric cars using its own EV platform based on the platform it has developed so far. Honda is still years away from producing an electric Civic - the iconic small sedan that helped Honda become a global auto powerhouse during the 1990s.

“You would have to pay an increase in these prices in order to reach the value zone of Civic,” he said.

There are certain markets where Honda is required to push ahead with EVs regardless of the cost involved. It has been reported that Europe and California have plans to ban new internal combustion vehicles by the year 2035, and in China, heavy subsidies make electrification a necessity. By the year 2028, the company plans to launch ten electric models in the country. 

Mibe says that predicting the US market is much more difficult due to the fact that the charging network is not good enough to provide reliable charging.

There is a problem with our charging infrastructure. It isn't located where it needs to be for our customers," Mibe said. “This is a matter that relates to the level of the country. As we continue to work toward our goal of achieving 40% EV sales by 2030, we need to keep these things in mind as we move forward. There is a lack of stability in the EV market."

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