In a recent announcement, Honda’s chief executive Toshihiro Mibe expressed confidence in the continued global surge in hybrid sales, predicting it will persist until the end of the decade. This optimistic outlook supports Honda’s ambitious ¥10tn ($65bn) investment plan aimed at expanding electric vehicle (EV) production. The company is steadfast in its goal to eliminate petrol and diesel cars by 2040, a pioneering target among Japanese automakers.
A Strategic Bridge to Full Electrification
Across the automotive industry, manufacturers are significantly increasing their investments in hybrid cars. This strategic pivot comes as consumers remain hesitant about fully electric cars due to their higher costs and concerns over charging infrastructure. While some companies are pushing back their EV timelines, the hybrid market is seeing a notable rise.
Diverging Opinions on EV and Hybrid Sales Trends
Industry leaders and policymakers are debating whether the current dip in electric vehicle sales in the US and Europe, alongside a rising interest in hybrids, is a fleeting trend. Toshihiro Mibe shared insights at a recent press conference, predicting that hybrid sales would peak around 2029 or 2030. He emphasised Honda’s commitment to advancing hybrid technology through the latter half of the 2020s.
Carmakers Prioritise Hybrid Models Amid Rising Demand
At the Financial Times’s Future of the Car Summit, executives from General Motors, Nissan, Hyundai, Volkswagen, and Ford highlighted their focus on meeting the increasing demand for hybrids. These vehicles, which blend a battery with a combustion engine, have proven profitable, often delivering double-digit returns unlike the frequently loss-making fully electric cars.
Honda’s Plans for New Hybrid Models
Honda is planning to introduce new hybrid models that will be smaller, more energy-efficient, and cost-effective to produce. This move is designed to generate revenue that will fund the company’s expansion into the electric vehicle sector. The anticipated rise in hybrid demand allows automakers with established hybrid technologies to continue profiting from their current models.
Forecast for Honda’s Hybrid Sales
Honda projects its annual hybrid sales to climb to 1.8 million units by the end of the decade, a significant increase from the 850,000 vehicles sold in the last financial year. This growth is expected to provide a substantial financial boost, supporting Honda’s transition towards electric vehicles.
Expanding Electric Vehicle Production
In addition to its focus on hybrids, Honda plans to launch seven new EV models and aims to produce over 2 million EVs by 2030, targeting approximately 40 percent of its global auto sales. The company has doubled its investment plan for the decade to ¥10tn, part of which will be allocated to constructing new plants and reducing the cost of EV battery manufacturing.
Major Investments in EV Infrastructure
Honda recently announced a significant $11bn investment, in partnership with other entities, to develop EV and battery manufacturing facilities in Ontario. This initiative marks the company’s largest investment in Canada to date. Simultaneously, Toyota, a leading hybrid manufacturer, revealed plans to increase spending on advanced technologies such as artificial intelligence, EVs, and software by more than 40 percent, attributing its record profits to robust hybrid car sales.
A Balanced Approach to Automotive Innovation
Honda’s strategic focus on hybrid vehicles as a transitional technology underscores its commitment to a sustainable future. By leveraging the profitability of hybrids to fund the development of electric vehicles, Honda is poised to navigate the evolving automotive landscape successfully. This balanced approach ensures that the company remains at the forefront of innovation while meeting the diverse needs of its global customer base.
