Toward Business Transformation Centered on Electrification

Electrification Approach in Small Mobility

Achieving carbon neutrality by 2050 involves various approaches beyond battery electrification. For instance, in large mobility such as aircraft and ships, sustainable aviation fuels (SAF) and e-fuels are considered promising due to their ability to address range limitations. It is essential to adapt to diverse solutions based on the characteristics of different types of mobility. Honda is advancing fundamental research and exploring business opportunities through multifaceted approaches, including fuel cells, SAF, and direct air capture (DAC), to contribute to the achievement of carbon neutrality.
On the other hand, for small mobility sectors such as motorcycles and automobiles, which are at the core of Honda’s business, we believe that battery electric vehicles (EVs) will be the most effective long-term solution. While the environment surrounding electrification is rapidly changing, and there are indications of a slowdown in EV adoption, particularly in regions like North America and Europe, where it is said that “EV adoption has reached a plateau,” we are confident that the shift towards EVs will continue steadily from a long-term perspective.
In what can be described as the “EV transition phase,” we consider it natural that the pace of EV adoption will fluctuate. While it is crucial to establish a system that can flexibly respond to changes in the market environment, it is equally important not to become overly focused on these short-term fluctuations. Instead, we must firmly prepare for the period of widespread EV adoption expected in the late 2020s and beyond. This involves steadily building a strong EV brand and a robust business structure with a medium- to long-term perspective. Rather than merely reacting to market changes, we are committed to addressing societal challenges earnestly and boldly pursuing the creation of new value. Our goal is to pave the way for a future where everyone can experience the “joy and freedom of mobility.”

Electrification and Intelligence Strategy in Automobile Business

The Essence of Car Manufacturing and the Value We Want to Offer with Next-Generation EVs

Honda has long cherished the principles of “M/M Principle^*” and the “Joy of Driving” in its approach to car manufacturing. With next-generation EVs, we aim to elevate these principles to new heights while also adding new value derived from electrification and intelligent technologies. Our goal is to offer a new mobility experience by delivering EVs that uniquely embody Honda’s commitment to seamlessly integrating hardware and software at an advanced level, thus bringing the “joy and freedom of mobility” to life.

• *M/M Principle: The “Man-Maximum, Machine-Minimum” concept, which means “maximizing space for people while minimizing space for mechanisms”

Electrification Shift in Anticipation of EV Adoption Era

During the current EV transition phase, we are actively leveraging alliances to gain new insights while strategically introducing EVs tailored to regional characteristics. This approach ensures a solid foundation for the future shift to EVs. As we look towards the full-scale EV adoption era in the late 2020s, we plan to launch our new global EV, the “Honda 0 Series”, starting in 2026, with North America as the initial market, followed by a global rollout.
By Fiscal Year Ending March 31, 2031, we aim to achieve a global sales ratio of over 30% for EVs and Fuel Cell Electric Vehicles (FCEVs). To realize this goal, we will enhance added value through Honda’s unique technological approach, which ensures high product competitiveness, and by evolving the value we provide across the entire value chain. On the cost side, we plan to reduce battery costs—currently accounting for about 40% of EV costs—by 20% through the establishment of a comprehensive EV value chain centered around core components like batteries. Additionally, we aim to reduce production costs at our vehicle assembly plants by 35%, thereby building a competitive business foundation.
By accelerating the independence of our EV business through attractive products and a lean business structure, we aim to achieve an Return on Sales (ROS) of over 5% for the EV business alone by Fiscal Year Ending March 31, 2031.

EV Product Lineup Strategy

(1) Early 2020s (Transition Period): Flexibly Introduce EVs Tailored to Regional Characteristics

As mentioned earlier, during the early 2020s, a transitional period for EVs, we will introduce appealing EVs that reflect Honda’s unique strengths, tailored to regional characteristics. This approach will allow us to steadily prepare for the widespread adoption of EVs in the future.
Specifically, in North America, we will launch the “Prologue,” a model co-developed with GM, starting in 2024. In China, where EV adoption is progressing rapidly, we introduced the “烨 (Ye)” series as the next EV lineup following the e:N series. In this fast-evolving market, we will continue to pursue innovation and accelerate the expansion of our EV lineup. In the small EV segment, we will launch the small commercial EV “N-VAN e:” in Japan this fall, followed by a small passenger EV in 2025 and a compact EV emphasizing driving enjoyment in 2026. These models will be introduced sequentially in regions where there is demand for compact EVs.

(2) Late 2020s (Widespread Adoption Phase): Global Rollout of the Honda 0 Series

As we approach the full-scale EV adoption phase in the late 2020s, we will globally launch the all-new EV “Honda 0 Series” starting in 2026. This series will be created with a new development approach, “Thin, Light, and Wise.” We plan to introduce various models, including the flagship “SALOON,” which was unveiled at CES 2024, held in Las Vegas, Nevada, USA in January 2024.

Achieving a New Mobility Experience through Intelligence

From the “Wise” perspective, one of the key development approaches of the “Honda 0 Series,” we will equip the vehicles with Honda’s proprietary vehicle OS. Coupled with advancements in connected technology, this will deliver a highly optimized digital user experience tailored to each customer. We are independently developing the foundational electrical and electronic (E&E)^* architecture, the software platform on top of it, and the applications that run on the system. Furthermore, we will enhance the product value by customizing the onboard system on chip (SoC) semiconductors with AI integration and low power consumption. This unique approach will enable us to offer a new mobility experience through the automation and intelligence of mobility.

• *E&E (Electrical and Electronic): design and structure of systems that connect devices such as ECUs and sensors installed in vehicles

In the models to be introduced in the late 2020s, we aim to achieve a level of evolution where the car embodies intelligence by using a “central architecture” that consolidates all the brain functions in a core ECU. This approach will enable seamless integration of the vehicle’s entire functionality, allowing us to respond to each customer’s preferences and needs with high precision and provide new and unprecedented experiences.
To realize these goals, we need advanced software development capabilities based on the concept of “software-defined mobility,” where software defines the value of hardware and services. Additionally, accelerating intelligence through AI technology requires advanced semiconductor design capabilities that balance high processing power with excellent energy efficiency. Therefore, Honda is actively pursuing not only the utilization and reskilling of internal human resources but also the expansion of partnerships to complement our capabilities. We are building a partnership with SCSK for software development and have signed a memorandum of understanding (MoU) with IBM for long-term joint research and development of next-generation semiconductor and software technologies. Through these comprehensive efforts, we aim to provide new and exciting experiences to our customers through the advancement of intelligent mobility.

Building a Flexible Response System to External Environmental Changes

During the transition period from ICE/HEV (Internal Combustion Engine/Hybrid) to EV, we will secure resources for electrification through further evolution of HEV models and build a production system capable of flexible responses to accelerating or decelerating EV demand and other environmental changes. For HEV models, significant cost reduction and weight reduction will be achieved through the proprietary 2-motor HEV system “e:HEV” and updates to the vehicle platform. By continuing to deliver these globally, we aim to strengthen the overall ICE business, including HEV, and steadily secure revenue.
Meanwhile, in terms of production technology, we will prepare for demand fluctuations by balancing existing ICE/EV mixed assembly lines with dedicated EV factories. Additionally, we will introduce a unique “Flex Cell Production System” combining modularization of battery components and cell production methods, allowing for flexible adjustments of production models and volumes in response to changes in EV demand and surrounding conditions.

Electrification Strategy in the Motorcycle and Power Products Business

Motorcycle Business

In the motorcycle business, we aim to achieve carbon neutrality across all products by the 2040s. To reach this target, we are positioning 2024 as the starting year for the global expansion of electric motorcycles. We will intensify our entry into the electric motorcycle market, focusing on India and ASEAN countries, and work to expand our product lineup globally. In addition, in the world’s largest motorcycle market, India, we have established a new research and development center in Bengaluru, known as the “Silicon Valley of India,” in 2024. We are committed to creating attractive electric products to accelerate electrification and leveraging our strategic location to collaborate with innovative companies, aiming to create new services and businesses.
For global electric motorcycle sales in 2030, we have set a target of 4 million units. To achieve this sales volume, we plan to introduce approximately 30 global electric models to the market. At the same time, to reduce the cost of finished vehicles, we will optimize specifications, procurement, and production, as well as the modularization of parts. Our goal is to cut costs by around 50% compared to current levels by 2030. We will invest approximately 500 billion yen in the electric business by Fiscal Year Ending March 31, 2031, aiming for a ROS of 5% for the electric motorcycle business alone, and over 10% in the 2030s.

Power Products Business

The power products business aims to address social issues such as labor shortages by providing unique value from Honda, including automation technologies for machinery in addition to electrification. Our goal is to contribute to improving both the “quality of work” and the “quality of life” for people.
We will position the power unit and garden sectors as the main domains for electrification and strengthen our efforts to enhance product capabilities, leading the industry in electrification. Additionally, by leveraging Honda’s strength in diverse mobility and sharing core components necessary for electrification with our motorcycle business, we will reduce costs and enhance development and cost competitiveness through inter-business synergies.