Honda, Long Skeptical on Battery EVs, Does an About-Face

Last Updated Nov 9, 2010 6:59 PM EST

Honda (HMC), whose global business is looking robust despite the strong yen, is taking the plunge into electric cars for the U.S. market. Honda has been one of the last holdouts against battery cars, preferring to field hybrids and, for the longer term, fuel-cell electrics.

What's happened, obviously, is a worldwide rollout of EVs that threatens to leave Honda behind. There are very few automakers today without a plug-in strategy. But Honda is in a very good position, even if it is late to the EV market. The company has a long history of delivering almost eerily flawless fuel-sipping cars to American consumers, so it has a considerable amount of goodwill to bank on as it fields an EV. Plus it has dealers and an advertising budget that should move some cars.

Former Honda CEO Takeo Fukui was a skeptic about battery EVs, but successor Takanobu Ito, who took office in 2009, is bullish. He told Reuters, "It's starting to look like there will be a market for electric vehicles. We can't keep shooting down their potential, and we can't say there's no business case for it."

Ito also offered what has become a truism among companies with battery EVs: Despite the fear of "range anxiety," not everybody needs 300 miles between plug ins or fill-ups. And although Honda is showing both a plug-in hybrid and a battery-only electric commuter car in Los Angeles next week, he seems to have taken a stand on the technology. "Plug-in hybrids are essentially for people who drive short distances, but it has the handicap of having an engine, a motor and a stack of batteries," he said. "Why wouldn't you just drive a [battery] EV?"

Honda says it will commercialize both a battery car and a plug-in hybrid for the U.S. market in 2012. I expect that it will follow Toyota's lead and adapt the Civic Hybrid to plug-in status. Further, it's coalescing around the lithium-ion battery technology basic to EVs, and will use li-ion in the next generation Honda Civic Hybrid, also planned for release in 2011 as a 2012 model. Honda's has a joint-venture partnership with GS Yuasa in the li-ion company Blue Energy.

It's late 2010, so Honda will have to play catch-up with the rest of the industry, but it's doing exactly that. According to Honda U.S. spokesman Chris Naughton, the company will bring its first EVs to the U.S. late this year for demonstration programs at Stanford University, Google and the City of Torrance, California. Torrance will get a plug-in hybrid for evaluation by the end of 2010, which is really quick for a car nobody's actually seen (but will see in Los Angeles next week).

"This is consistent with our strategy of the last few decades, considering the whole range of powertrains," Naughton said. "We have the natural gas Civic, diesels in Europe, and the FCX Clarity hydrogen car, as well as an EV history with the first U.S. hybrid in the 1999 70-mpg Insight and the [EV-1 competitor] Honda EVPlus [pictured at top']."

Naughton pointed out that the FCX Clarity, one of the more sophisticated fuel-cell vehicles with 300-mile range, is actually an electric car with hydrogen replacing a battery pack. "We're building an ever-growing knowledge base of running cars with electricity, whether fuel cell and doing it in a way that is smooth and seamless to the driver."

And that, of course, speaks to Honda's natural advantage in the EV space, even as a latecomer with no history of battery cars. I'd buy a Honda plug-in hybrid, wouldn't you? After all, I already own a Honda Fit, and would love to get my hands on the hybrid version that the company is rolling out everywhere but North America.

Honda is also in a strong position to bankroll EV programs, having reported a $2 billion global profit in the third quarter (up 150 percent from the year before). U.S. sales were down because of the strong yen, but Asia is very strong. On balance, the company recently lowered its projections for world sales this year by 25,000 to 3.6 million cars. The cuts are in Europe and North America; Asian forecasts are up.

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Photo: Honda