In 2023, Honda and GS Yuasa decided to jointly invest and establish a new automotive battery R&D plant called "Honda GS Yuasa EV Battery R&D." According to a report from Nikkei, this joint venture will begin operations on August 1 after obtaining the relevant approvals. This move signifies a new phase for Honda's EV business.
Automotive battery packs constitute a significant portion of an EV's components. A BEV battery weighs around 300–500 KG and accounts for roughly 25% of the car's total weight. Because of their weight, procuring and transporting batteries internationally is costly. Therefore, Honda sources its BEV batteries locally, partnering with LGES (LG Energy Solutions) in the US market and CATL in the Chinese market. The market's next point of focus is the battery source for the Japanese market.
Honda plans to produce its new BEV in 2024 and has procured the products of Envision AESC, a joint venture between China and Japan. However, Envision's Japanese plant originated from Nissan's automotive battery business. Using the same battery as one's direct competitor makes it challenging to create market differentiation. Therefore, Honda needs to find an alternative long-term battery source.
In 2009, Honda and GS Yuasa jointly established the automotive battery plant "Blue Energy" to produce lithium batteries for automobiles. The two sides further announced in May 2023 that they have signed a joint venture agreement to establish a lithium battery plant in Japan with an annual production capacity of 20GWh. It is expected to begin operation in 2027, with a total investment of JPY 434.1 billion (approx. US$3.03 billion). Japan's Ministry of Economy, Trade, and Industry (METI) will provide a subsidy of up to 36.6% of the total investment, amounting to JPY 158.7 billion.
The Blue Energy EV battery plant investment project added a third major supplier to Japan's automotive battery industry, joining the likes of Panasonic and Envision AESC. However, because the focus of Blue Energy is on factory construction, it could struggle to focus the resources for R&D on next-gen battery technologies like solid-state batteries and production lines. Therefore, establishing a separate Honda GS Yuasa EV Battery R&D plant has become the consensus.
It is currently uncertain whether Honda GS Yuasa EV Battery R&D will receive subsidies from the Japanese government just like Blue Energy. However, the possibility of more subsidies is not ruled out due to the government's concerns about losing more advantages in the automotive sector. In 2017, when Panasonic gave up its spot as the world's top automotive battery supplier, Japanese brands still had a global market share of over 30%. By 2022, that figure has dropped to below 10%.
Additionally, since Blue Energy has a president that's from GS Yuasa, the president of Honda GS Yuasa EV Battery R&D will likely be someone from Honda to maintain a balanced partnership, as the two sides have a 50/50 split in their investments for this project.
Article translated by Jack Wu
