Honda Motor is setting an aggressive pace in electric vehicle (EV) development with a record investment of 1.19 trillion yen ($7.6 billion) earmarked for research and development (R&D) this fiscal year. This investment, marking a significant 23% increase from the previous year, is Honda’s largest annual R&D allocation to date, focusing primarily on advancing its EV and software capabilities.
This strategic financial commitment is supported by robust earnings, particularly from the strong performance of hybrids in the North American market. Honda anticipates a consecutive year of record operating profits, forecasting an operating profit of 1.42 trillion yen for the fiscal year ending in March 2025.
The investment per automobile will reach 288,000 yen, significantly outpacing Toyota’s 118,000 yen, indicating Honda’s intensified focus on development as it prepares for a future dominated by electric and fuel cell vehicles. By 2040, Honda plans to exclusively sell EVs and fuel cell vehicles globally, a bold move not yet matched by competitors like Toyota and Nissan.
Despite its ambitious EV strategy, Honda’s current global market share in this segment is less than 1%, with only about 19,000 units sold in 2023. The company’s plan includes substantial capital investments, such as a 15 billion Canadian dollar ($11 billion) initiative for EV and battery production facilities in Canada, set to begin operations in 2028.
Honda’s strategic pivot to electric aligns with its strengths in hybrid technology and market trends, particularly in North America, where cost-effective hybrids have gained traction among value-focused consumers. Despite challenges in the Chinese market, where local manufacturers are asserting dominance, Honda’s commitment to electrification and innovation remains unwavering, ready to adapt to market changes and policy shifts, such as potential changes in U.S. EV subsidies.
