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Honda defies the electric car craze to bet on hybrid cars

Honda says it will pour $40 billion into electric vehicles over the next decade, but has stopped short of throwing all of its weight in the back of battery-powered cars because it bets its hybrids will dominate in the future. near future.

While the company became the first Japanese automaker to announce the elimination of gasoline-powered cars last April, Honda has only one EV model on the market, trailing Volkswagen and other global rivals. .

On Tuesday, it said it would rely on hybrid models with gasoline-electric systems until the infrastructure is ready to support more electric vehicles on the road, in a move that follows. hedging logic of other automakers Toyota and BMW.

Toshihiro Mibe, CEO of Honda, who took on this role, said: “We need to take into account many factors, such as living environment and penetration rate of renewable energy, rather than just transferring to use electric cars.

Mibe emphasizes that Honda’s hybrid technology, which combines a smaller petrol or diesel engine with a battery, will lead the company over the next decade. “We are ending conventional engines but we will still focus on hybrids, and that will be our strength in 2030 or even 2035,” he said.

The automaker has outlined a plan to make the most of its partnership with General Motors and Sony to enter the affordable electric vehicle market. It says it will launch 30 electric vehicle models by 2030 and produce more than 2 million annually. Shares of Honda did not react to the announcement.

Last week, Honda announced that it will co-develop with GM millions of affordable EVs for North America and China with production slated for 2027.

Battery supply is a growing problem for Honda as automakers around the world race to secure reserves to boost production. “How they supply EV batteries is far more important than how much they invest in EVs,” said Sanshiro Fukao, a senior fellow at Itochu Research Institute.

As the company catches up with global rivals, “Honda under Mibe is moving further and further away from domestic production and attracting battery suppliers should be the biggest priority for any manufacturer. which car exports today,” he added.

The Japanese automaker said in North America it will use GM’s Ultium batteries and it is considering forming a joint venture with another undisclosed company to produce batteries for use in electric vehicles.

In China, Honda will source batteries from CATL, the world’s largest global battery group, while in Japan, it will purchase batteries from Envision AESC, the main battery supplier for the Renault-Nissan alliance, for the Compact electric truck for commercial use.

While the announcement shows Honda’s commitment to electric vehicles, “the stock market remains sceptical,” said Seiji Sugiura, a senior analyst at consulting firm Tokai Research Institute Tokyo.

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