Honda Plans to Set Up a Joint Venture with Hitachi to Develop EV

Automotive - Pavan Pandey - Feb 07,2017

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honda plans to set up a joint venture with hitachi to develop ev

Honda Motor Co Ltd. and Hitachi Ltd.’s auto parts subsidiary plan to build a joint venture to develop, produce and sell motors for EV (electric vehicles).

Both of these Japanese multinational companies are joining forces to compete in the highly specialized green vehicle sector.

On Tuesday, during a news briefing in Tokyo, the chief executive officer of Hitachi Automotive Systems Ltd. Hideaki Seki stated that the joint venture has plans to produce in Japan, United States and China, and will consider using Hitachi’s current factories in those nations. 

Honda’s chief executive officer Takahiro Hachigo said in the news briefing that producing motors is capital intensive, so rather than just manufacturing motors for company own purposes, Honda would like to produce in large sizes with the opportunity of supplying a variety of consumers.

He further added that in pairing up with Hitachi, Honda is expecting to tap into its proficiency in volume production. He also said that creating a joint venture with Hitachi can save costs as motor manufacturing requires huge capital investment.

In a joint statement, the two companies stated that the newly proposed venture will be established in the month of July with an investment of $44.60 million (5 billion yen), and will be 51% owned by Hitachi Ltd. and 49 % held by Honda Motor Co Ltd.

They further added that it will construct motors to be used in petrol hybrids, battery-electric vehicles and plug-in hybrids, and will have auctions and manufacturing functions in the US and China in addition to the homeland.

Automobile manufacturers are building partnerships amid pressure from watchdogs and increasing costs for developing cleaner and self-driving cars. Last month Honda Motor stated that it will mutually manufacture fuel-cell systems with the US automaker, General Motors Co.

Hitachi Automotive Systems Ltd. is a completely owned subsidiary of Hitachi Ltd and a longtime supplier of types of machinery including brake parts and engine to Honda Motor Co Ltd.