Honda And Hitachi Automotive In EV Motor Joint Venture

Honda Chief Executive Officer Takahiro Hachigo (R) and his Hitachi Automotive counterpart Hideaki Seki shake hands at a photo session after their news conference in Tokyo, Japan, February 7, 2017. REUTERS/Kim Kyung-Hoon

Hitachi Ltd’s Auto Parts subsidiary and Honda Co Ltd plan to partner to develop, manufacture and sell motors for electric vehicles, combining their strengths to better keep up in the highly specialized ‘green’ car segment. During a news briefing on Tuesday, Takahiro Hachigo, the Honda Chief Executive Officer told the reporters that manufacturing motors are a costly undertaking and instead of producing them for their consumption, it will be ideal for them to produce in large volumes with the possibility of supplying different clients.

The two companies confirm that the venture will commence in July with a capital of five billion yen ($44.69 million), Hitachi Automotive Systems Ltd owning 51 percent and Honda holding 49 percent of the total shares. They further stated that the motors that they build will be used in plug-in hybrids, petrol hybrids, and battery-electric cars, and will have manufacturing and sales functions in China, Japan, and the United States.

Hitachi Automotive Systems is an entirely owned subsidiary of Hitachi Ltd and has been in the field for a long time, supplying components like brake parts and engine to Honda. Renault SA and Alliance of Nissan Motor Co Ltd are Hitachi’s biggest clients, accounting for about a third of their yearly sales. Other customers include Ford Motor Co, Volkswagen AG (VOWG_p.DE) and Toyota Motor Corp.

The tie-ups showcase Honda’s readiness to merge with other players in the industry as it competes to create more lower-emission cars. This comes after the last week’s announcement from Honda about teaming up with General Motors Company to produce hydrogen fuel cell power systems in the US from 2020. Janet Lewis, the Managing Director of Equity Research at Macquarie Capital Securities Japan stated, “It’s an indication that numerous advanced technologies for automobiles coming up are expensive. Therefore companies are partnering so they can share the weight and also reduce their risks.