Image Source : China Visual

BEIJING, September 7 (TMTPOST) – Honda China will join hands with Dongfeng Motor Group (00489. HK) and Guangzhou Automobile Group (601238. SH) to set up a power battery procurement company to purchase batteries from Contemporary Amperex Technology Co., Limited (CATL), a global leader in lithium-ion battery development and manufacturing (300750. SZ).

The power battery joint venture procurement company will be formally established at the end of September, with Honda China holding 50% of the shares and Dongfeng Motor Group and GAC Group holding 25% of the shares respectively. Dongfeng Motor Group and Guangzhou Automobile Group are Honda's joint venture partners in China.

Automotive power batteries from CATL will be purchased by the new company in the future and the new plant being built by CATL in Yichun, Jiangxi province, will give priority to Honda China in supplying batteries.

Honda China did not disclose the exact number of batteries purchased, but according to its plan to sell 800,000 pure electric vehicles in China by 2030, its battery procurement volume will exceed 100 GWh. Honda China plans to launch 10 pure electric models in China by 2027. Sources said the above sales plan may be adjusted as the speed of electrification in China exceeds expectations.

Honda has planned a battery supply system globally, with CATL as its partner in China, LG New Energy in South Korea as its partner in the U.S. market, and Envision AESC as its supplier in Japan. The company also has plans to develop its own solid-state batteries.

In April and June 2022, Honda's two joint ventures launched their first pure electric vehicles in China respectively, priced from 170,000 yuan ($25,143) to 220,000 yuan ($32,538). Both models performed poorly in the market, with monthly sales hovering around a few hundred units. Sources close to Honda China said the development of the two models was mainly done in China, with a launch date earlier than 2019. And these years happen to be the most intense phase of change in China's electric vehicle market, and Honda China's R&D pace has been adjusted several times.