Honda (HMC) Go All-In on Electric, But Will The Hybrid Ever Die?

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Ollie Martin
Updated: 12 Apr 2022

Key points:

  • Honda step up electric mission with $64B investment in research and development
  • Follows extension of partnership with GM to manufacture ‘affordable' EVs
  • Honda says hybrid technology will remain a ‘weapon' for its business

As the world slowly pivots towards renewable ‘new energy’ vehicles, manufacturers that weren’t leading the pack are finding themselves nipping at the heels of market leaders. As demand inevitably continues to increase, it's crucial for manufacturers to embrace the curve in order to remain competitive. Whilst demand for traditional ICE’s isn’t exactly waning, it’s only a matter of time before the landscape, utilities, and wider cultural evolution play a collective part in bidding farewell to the traditional engine in favor of electric. 

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A looming factor over widespread EV adoption has always been cost, and the logistical shortcomings involved with vehicle charging. Recently, we’re seeing manufacturers aim for mass-produced, low-cost EVs in hopes of securing the otherwise neglected consumer base. Just last week, Honda and GM extended their partnership with a focus on affordable vehicles. Following this, Honda announced this morning that the company plans to spend $64B on research and development over the coming decade; hoping to roll out 30 EV models by 2030.

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Investors should be praising the move from Honda. Not simply because of the general market swivel, but because as it stands, Honda has the chance to claw back some ground after lagging behind Chinese, European and US automakers. If manufacturers don’t act now for their slice of global market share, it’s difficult to say how they will manage as the space grows tighter, dominated by clear industry leaders. 

Interestingly, even as Honda goes electric, its long-standing hybrid technology will likely remain a prominent asset of forthcoming vehicles. The majority of EV investors will understand EV infrastructure as a well-engineered product of a developed nation, but what about emerging countries? By maintaining a keen hybrid culture, Honda has the opportunity to swoop in on markets where infrastructure to support EVs is still some way off. The company feels incredibly strongly about this; deeming hybrids a ‘weapon’ in its business. 

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