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Honda (HMC) Pledges $63B Investment for Bold EV Efforts
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Honda Motor (HMC - Free Report) , at a recently-held press conference, revealed ambitious plans to drive its futuristic electrification vision. The company is striving to reduce its environmental footprint and hence looks to strengthen its electrification initiatives. To this end, Honda announced a spending of nearly 8 trillion yen ($63 billion) for its research and development expenses over the next 10 years, out of which it plans to invest around 5 trillion yen in electrification and software. It will invest about 1 trillion yen in new growth areas. It will also dedicate investment in startups with high-potential advanced technologies and business models at a scale of 10 billion yen per year.
The Japan-based auto giant targets to launch 30 electric vehicles (EV) models globally by 2030. It aims for a production volume of more than 2 million units annually. It has laid out a framework to introduce EV models across the regions. In 2024, it will introduce two EV models in North America. In China, it will unveil 10 new EV models by 2027. In Japan, it has plans to introduce a commercial-use mini-EV model in the 1-million-yen price range in 2024, followed by the gradual introduction of personal-use mini-EVs and EV SUVs. Later in 2026, Honda will begin adopting Honda e: Architecture, an EV platform that combines both the hardware and software platforms.
With regards to battery procurement, Honda has come up with two basic approaches. It will ensure stable procurement of liquid lithium-ion batteries in each region, namely North America, China and Japan, by strengthening the external partnership. Further, it will accelerate its independent research and development of next-generation batteries. It intends to build a demonstration line, investing around 43 billion yen for all-solid-state batteries it currently has, which it plans to make operational in the spring of 2024.
Honda is focused on strengthening its existing business model and looking for new growth areas. It should be noted that the total number of variations at the trim and option level for global models has been reduced to less than 50% of the 2018 levels. Honda seeks to reduce it to one-third by 2025. It also aims for carbon neutrality in all its products and activities by 2050, for which it has come up with a multi-pronged approach. It will utilize swappable batteries and hydrogen as well as electrification of automobiles.
Previously, Honda divided its organization by products, namely motorcycle, automobile and power products. But, starting this fiscal year, core technology areas like electrified products and services, battery, energy, Mobile Power Pack, hydrogen and software/connected technologies have been moved from their respective product-based organizations and combined under the newly created Business Development Operations. This will ensure the “cross-domain” synergy effect among Honda products.
Zacks Rank & Key Picks
HMC currently carries a Zacks Rank #3 (Hold). Shares of HMC have lost 12.9% over the past year compared with its industry’s 11.9% decline.
BRP Group has an expected earnings growth rate of 9.1% for fiscal 2023. The Zacks Consensus Estimate for current-year earnings has been revised around 7.9% upward in the past 60 days.
BRP Group’s earnings beat the Zacks Consensus Estimate in all of the trailing four quarters. DOOO pulled off a trailing four-quarter earnings surprise of 68%, on average. The stock has declined 11.4% over the past year.
Tesla has an expected earnings growth rate of 44% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised around 4.4% upward in the past 60 days.
Tesla’s earnings beat the Zacks Consensus Estimate in all of the trailing four quarters. TSLA pulled off a trailing four-quarter earnings surprise of 33.3%, on average. The stock has risen 28% over the past year.
Visteon has an expected earnings growth rate of 104.3% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised around 9.4% upward in the past 60 days.
Visteon’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters and missed in the remaining. VC pulled off a trailing four-quarter earnings surprise of 209.9%, on average. The stock has declined 18.3% over the past year.
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Honda (HMC) Pledges $63B Investment for Bold EV Efforts
Honda Motor (HMC - Free Report) , at a recently-held press conference, revealed ambitious plans to drive its futuristic electrification vision. The company is striving to reduce its environmental footprint and hence looks to strengthen its electrification initiatives. To this end, Honda announced a spending of nearly 8 trillion yen ($63 billion) for its research and development expenses over the next 10 years, out of which it plans to invest around 5 trillion yen in electrification and software. It will invest about 1 trillion yen in new growth areas. It will also dedicate investment in startups with high-potential advanced technologies and business models at a scale of 10 billion yen per year.
The Japan-based auto giant targets to launch 30 electric vehicles (EV) models globally by 2030. It aims for a production volume of more than 2 million units annually. It has laid out a framework to introduce EV models across the regions. In 2024, it will introduce two EV models in North America. In China, it will unveil 10 new EV models by 2027. In Japan, it has plans to introduce a commercial-use mini-EV model in the 1-million-yen price range in 2024, followed by the gradual introduction of personal-use mini-EVs and EV SUVs. Later in 2026, Honda will begin adopting Honda e: Architecture, an EV platform that combines both the hardware and software platforms.
With regards to battery procurement, Honda has come up with two basic approaches. It will ensure stable procurement of liquid lithium-ion batteries in each region, namely North America, China and Japan, by strengthening the external partnership. Further, it will accelerate its independent research and development of next-generation batteries. It intends to build a demonstration line, investing around 43 billion yen for all-solid-state batteries it currently has, which it plans to make operational in the spring of 2024.
Honda is focused on strengthening its existing business model and looking for new growth areas. It should be noted that the total number of variations at the trim and option level for global models has been reduced to less than 50% of the 2018 levels. Honda seeks to reduce it to one-third by 2025. It also aims for carbon neutrality in all its products and activities by 2050, for which it has come up with a multi-pronged approach. It will utilize swappable batteries and hydrogen as well as electrification of automobiles.
Previously, Honda divided its organization by products, namely motorcycle, automobile and power products. But, starting this fiscal year, core technology areas like electrified products and services, battery, energy, Mobile Power Pack, hydrogen and software/connected technologies have been moved from their respective product-based organizations and combined under the newly created Business Development Operations. This will ensure the “cross-domain” synergy effect among Honda products.
Zacks Rank & Key Picks
HMC currently carries a Zacks Rank #3 (Hold). Shares of HMC have lost 12.9% over the past year compared with its industry’s 11.9% decline.
Image Source: Zacks Investment Research
Better-ranked players in the auto space include BRP Group, Inc. (DOOO - Free Report) , sporting a Zacks Rank #1 (Strong Buy), and Tesla, Inc. (TSLA - Free Report) and Visteon Corporation (VC - Free Report) , each carrying a Zacks Rank #2 (Buy), currently. You can see the complete list of today’s Zacks #1 Rank stocks here.
BRP Group has an expected earnings growth rate of 9.1% for fiscal 2023. The Zacks Consensus Estimate for current-year earnings has been revised around 7.9% upward in the past 60 days.
BRP Group’s earnings beat the Zacks Consensus Estimate in all of the trailing four quarters. DOOO pulled off a trailing four-quarter earnings surprise of 68%, on average. The stock has declined 11.4% over the past year.
Tesla has an expected earnings growth rate of 44% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised around 4.4% upward in the past 60 days.
Tesla’s earnings beat the Zacks Consensus Estimate in all of the trailing four quarters. TSLA pulled off a trailing four-quarter earnings surprise of 33.3%, on average. The stock has risen 28% over the past year.
Visteon has an expected earnings growth rate of 104.3% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised around 9.4% upward in the past 60 days.
Visteon’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters and missed in the remaining. VC pulled off a trailing four-quarter earnings surprise of 209.9%, on average. The stock has declined 18.3% over the past year.