Honda may make batteries in India as part of EV push
Japanese car maker to identify type of EVS to be made in India
NEW DELHI: Japanese car maker Honda Motor Co Ltd plans to set up a lithium ion battery manufacturing unit in India as it seeks to tap the emerging, potentially lucrative electric vehicle (EV) opportunity in the country.
Honda Cars India Ltd, the Indian unit, will next identify the type of EVS the company would want to make locally, a person with direct knowledge of the development said on condition of anonymity. These initiatives were discussed at a Honda India board meeting recently and a decision is imminent, the person said, declining to disclose the investment that the project would entail.
The government wants only electric vehicles to ply on India’s roads by 2030 as part of its commitment to reduce greenhouse gas emissions under the global agreement on climate change, and to reduce spending on oil imports, which, according to one estimate, could double to an annual $300 billion by that year.
According to an announcement made by Honda, by 2030, electric cars will comprise 65% of the overall sales of the company. Of that 15%, will be pure electric while the rest will be hybrid, plug-in hybrid and fuel cell battery powered vehicles.
Currently, the Indian subsidiary is Honda’s fourth largest after its units in the US, China and Japan, in terms of contribution to the overall vehicle sales of the group.
In July, Honda Motor decided to form a joined venture with Hitachi Automotive Systems Ltd to develop motors for electric vehicles. Hitachi will own a 51% stake in the joint venture com- pany while Honda will own 49%.
“Recently, on the global front Honda has tied up with Hitachi for electric motors and we will derive benefits from all those developments. Our India strategy has to align with Honda’s global strategy. We have been working on the electric vehicle strategy for quite some time now,” Jnaneswar Sen, senior vice-president, Honda Car India, said.
Sen refused to divulge any details about the company’s India EV plan.
According to industry executives who didn’t want to be named, work has started on the project at the research and development level. Honda’s first electric car in India may be a product based on the Brio hatchback platform, these executive said.
At the recent Tokyo Motor Show, the Japanese company showcased two electric vehicles, one each in the commuter and sports segments. It is also preparing an electric vehicle for China, to be launched next year, another one for Europe to be launched in 2019 and one for Japan which will hit the roads on 2020.
“To participate in the EV market in India, we will have to be relevant to the market and that is why we are preparing a strategy to participate properly. We are studying the Indian laws, customer psyche along with Honda’s global strategy,” explained Sen.
In February, Suzuki Motor Corp and Toyota Motor Corp, came together to make small electric cars in India. Apart from that, Suzuki has also decided to set up a lithium ion battery manufacturing plant with Toshiba Corp and Denso Corp in Gujarat.
Honda India has dropped plans to adopt hybrid vehicle technology after prices of these models rose under the GST regime implemented on July 1. Hybrid cars attract 43% duty under GST, while electric vehicles (EVS) are being taxed at 12%.
“We had started on the hybrid direction and last October we launched the Accord hybrid. Prices have gone up after the GST implementation, hence demand has dried up. So it is back to the drawing board for us because the technology costs money, and the customer does not want to pay once the prices increased substantially,” said Sen.
Honda is the second car manufacturer to scrap its plans to sell hybrid cars in India after the significant increase in tax. Earlier this year Toyota, also stopped selling the hybrid variant of its premium sedan Camry.