July 21 (Bloomberg) -- Honda Motor Co. will start selling a battery-powered car in 2012, curbing the skepticism about such vehicles that made it the last of Japan’s largest automakers to enter the market for rechargeable autos.
Honda also plans to sell mid-size to large plug-in hybrids in Japan and the U.S. in 2012, Chief Executive Officer Takanobu Ito told reporters yesterday in Saitama prefecture, north of Tokyo.
Japan’s second-largest automaker follows rivals Toyota Motor Corp. and Nissan Motor Co. in planning plug-in models and battery-powered cars as governments tighten emissions rules, and as inadequate infrastructure hampers popularization of the hydrogen fuel-cell vehicles favored by Honda. A zero-emission vehicle rule in California is forcing Honda to make the move to electric cars, which the carmaker still considers suitable only for short-distance drives.
“My predecessor didn’t like batteries,” Ito said, referring to former President Takeo Fukui. “But we have been researching them all along. Since I became president, that was accelerated quite a bit.”
In California, the most populous U.S. state, the largest carmakers by volume must sell about 60,000 plug-in hybrids and electric cars combined from model years 2012 through 2014, according to the state’s Air Resources Board.
“There’s tremendous pressure being put on, in California and nationwide by the Obama administration, to offer these advanced vehicles,” said Jim Hossack, an industry analyst at AutoPacific Inc. in Fountain Valley, California. “Every major manufacturer is going to have to play ball.”
U.S. fuel-economy rules that phase in after 2015 make the addition of plug-ins and hybrids inevitable, Hossack said.
Ghosn’s Prediction
Nissan, Japan’s third-largest automaker, will sell its lithium-ion battery-powered Leaf hatchback late this year in Japan, the U.S. and Europe.
Toyota will start selling a short-distance pure electric car and plug-in hybrid by 2012.
Nissan CEO Carlos Ghosn predicts electric vehicles will account for 10 percent of global car sales by 2020. By contrast, Ito said yesterday electric cars won’t reach a mass-market level of demand in 20 or even 30 years and that plug-in hybrids are more “realistic” in the shorter term.
Pure electric cars will make up 0.63 percent of global car production in 2016, or about 600,000 vehicles, according to a forecast by consulting company IHS Automotive.
Short Driving Ranges
Electric vehicles sales will be limited by short driving ranges and the high cost of batteries, said Toru Hatano, an analyst at IHS Automotive in Tokyo. “The EVs being introduced are only for short distances, so I don’t see this as a big sign that the market will expand,” he said. “Even assuming prices come down in five years, it could take until 2020 to extend the driving range.”
Honda will expand its line-up of gasoline-electric hybrid cars and expects production of those models and plug- ins to make up more than 10 percent of its global output by 2014 from less than 6 percent now, Executive Vice President Koichi Kondo said. The company isn’t including electric cars in its forecast.
Shares in Honda fell 0.2 percent in Tokyo Stock Exchange trading to 2,601 yen as of 9:41 a.m. Honda has declined 16 percent this year, compared with an 11 percent drop in the Nikkei 225 Stock Average.
The company’s hybrid line-up now includes the Insight and Civic compacts and sporty CR-Z coupe. Honda plans to sell a hybrid version of the Fit compact in Japan later this year.
Toyota’s Success
The carmaker hasn’t matched Toyota’s success with hybrid cars. The Prius, the world’s most popular hybrid, outsold Honda’s Insight 6-to-1 in the U.S. this year through May.
Honda’s next version of the Civic hybrid, due within a year, will use lithium-ion batteries rather than the current nickel-metal hydride pack, Ito said. The carmaker had previously said it would offer lithium-ion versions of Civic and Acura luxury models. Lithium batteries can store as much as twice the energy of nickel-metal hydride batteries that currently power Toyota’s Prius and Honda’s hybrids.
Honda will shift gradually to lithium-ion batteries as depreciation costs for nickel-metal hydride battery production are booked, Ito said.
The carmaker will also introduce a 500,000-rupee ($10,600) car in India next year and will sell a similar model in Thailand, he said.
Honda, also the world’s biggest motorcycle maker, aims to build a new plant in Indonesia next year with capacity to make 500,000 two-wheelers a year.
In Japan, Honda will start minicar production at its Suzuka plant in 2012 and at its Yorii plant in 2013, Ito said. Yachiyo Industry Co., Honda’s 50 percent-owned subsidiary, canceled the planned construction of a factory. Minicar assembly at Yachiyo’s existing plant will continue, Honda said.
--With assistance from Alan Ohnsman in Los Angeles. Editors: Terje Langeland, Ian Rowley.
To contact the reporter on this story: Makiko Kitamura in Tokyo at mkitamura1@bloomberg.net; Yuki Hagiwara in Tokyo at yhagiwara1@bloomberg.net
To contact the editor responsible for this story: Kae Inoue in Tokyo at kinoue@bloomberg.net
