Honda, Hitachi to Form Electric Engine Venture

Honda Motor Co. and Hitachi Automotive Systems announced today that they plan to work together to develop, produce and sell motors for electric vehicles and other alternative vehicles.

The two companies will now enter formal discussions to create the new venture, which will be launch in July with an investment of 5 billion yen ($44.7 million), and will be 51% owned by Hitachi, 49% by Honda.

This deal adds to the bevy of automakers teaming up with parts suppliers to expand product lineups and reduce costs for EVs and other alternative vehicles.

“Producing motors is capital-intensive, so rather than just manufacturing them for our own purposes, we would like to produce in large volumes with the possibility of supplying a variety of customers,” Honda Chief Executive Officer Takahiro Hachigo said.

The pairing of two Japanese companies for an EV venture is significant as Japan has been working for nearly a decade to convert its Hamamatsu auto parts region from a gasoline engine economy to an electric one. Honda was founded in the region, which is also headquarters to Suzuki Motors and Yamaha Motor.

Companies in Hamamatsu have been working for years to secure the future of an estimated 2,000 auto parts makers in the city that makes up two-thirds of its 3 trillion yen ($37 billion) manufacturing economy and supports almost 370,000 jobs.

Hitachi and Honda’s yet-to-be-named company will build motors to be used in petrol hybrids, plug-in hybrids and battery-electric cars, and will have sales and manufacturing functions in the United States and China in addition to Japan, the companies said. It will also include manufacturing and sales outposts in the United States and China.

This comes on the heels of Honda’s announcement last week that it is teaming up with General Motors to produce hydrogen fuel cell power systems in the United States starting in around 2020. Meanwhile, Hitachi has alliances with Nissan Motor and Renault, which the company counts as its biggest client, accounting for around one-third of annual sales. Other customers include Toyota Motor, Ford Motor, and Volkswagen.

As of last March, Hitachi employed more than 37,000 people, while Honda at year end had more than 200,000 on staff.

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