Honda Motor Co Ltd and Hitachi Ltd’s auto parts subsidiary are planning to form a joint venture to develop, produce and sell motors for electric vehicles (EV), joining forces to better compete in the highly specialized “green” car segment.
Nowadays, automakers are increasingly teaming up with parts suppliers to build components for the fast-growing EV segment as a way to expand product line-ups while containing high development costs.
Takahiro Hachigo, CEO of Honda said in a statement, “Producing motors is capital intensive, so rather than just manufacturing them for our own purposes, we would like to produce in large volumes with the possibility of supplying a variety of customers.”
“In pairing up with Hitachi, we’re hoping to tap into its expertise in volume production,” he further added.
The venture is expected to be established in July with an investment of 5 billion yen ($44.69 million), and will be 51 percent owned by Hitachi Automotive Systems Ltd and 49 percent held by Honda, the two companies cleared in a statement.
In a statement, they also clarified that it will build motors to be used in petrol hybrids, plug-in hybrids, and battery-electric cars, and will have sales and manufacturing functions in the United States and China in addition to Japan.
While, Hitachi Automotive Systems is a wholly-owned subsidiary of Hitachi Ltd and a longtime supplier of components including engine and brake parts to Honda.
It assumes the alliance of Nissan Motor Co Ltd and Renault SA as its biggest client, accounting for around one-third of annual sales. Other customers include Toyota Motor Corp, Ford Motor Co and Volkswagen AG.
The tie-up highlights Honda’s desire to join with other industry players as it competes to develop more lower-emission cars. It comes after Honda’s announcement that it was teaming up with General Motors Co to produce hydrogen fuel cell power systems in the United States from around 2020.
Janet Lewis, MD of equity research at Macquarie Capital Securities Japan, said in a statement, “It’s a reflection that a lot of the new technologies being developed for automobiles are not cheap, so companies are finding partners that they can share the burden with to reduce their risk.”
He further added, “Nobody knows exactly where the industry is going to go, so everybody has to have a variety of solutions. It’s a way of preparing for the unknown.”
Honda is dreaming to launch battery-powered and plug-in petrol hybrid versions of its Clarity fuel-cell vehicle later this year.