For all of its other achievements in business, Honda Motor Co. holds one distinction that no longer has quite the pizazz it once did: Honda is, by its own reckoning, the world’s largest producer of internal combustion engines.
Which made it all the more stunning last month when the Tokyo automaker announced that by 2040, all of its cars and light trucks will be electric.
Honda, which also produces motorcycles, lawnmowers, power generators and airplanes, is joining a small group of auto brands that are going all-in on electric power. Honda, including Acura, joined Cadillac, Ford of Europe, Jaguar, Mini and Volvo in declaring intentions to sell electric vehicles only, taking a plunge into a future that many people today find alluring, but which still has others scratching their heads, wondering how it will all be possible.
Where will all the batteries come from? Where will battery-makers obtain enough lithium and other minerals from to make them? Will there be enough charging stations? And will EV owners be able to drive 450 miles on a dark, cold November night to see Grandma for Thanksgiving?
To a growing number of automakers, those worries are simply details to be ironed out as the new market emerges.
To be sure, all global automakers are developing EV portfolios. Tesla has been all-EV since it launched, and now it has a crop of startup followers, including Lucid Motors, Rivian and Nio. At the same time, industry goliaths everywhere are promoting plans to devote at least some of their global portfolios to EVs, including Volkswagen, Hyundai Motor Group, Mercedes-Benz, Stellantis, Nissan and Toyota.
“We can see where customer demand is going,” Ford of Europe President Stuart Rowley told Automotive News Europe in March, shortly after the company announced its plans. “We want to put our capital in the growing parts of the market.”
Electrification is unquestionably the industry game-changer of this decade. Even manufacturers that earn their daily bread from hardcore internal combustion engine parts are feeling the carpet move beneath their feet.
“Electrification is not only here today, it’s accelerating in regards to the adoption rate,” said David Dauch, CEO of American Axle & Manufacturing Inc. Dauch’s company had $4.71 billion in sales last year from primarily axles, driveshafts and propulsion products. This month, American Axle accelerated its own shift to EVs with the announcement of a partnership with the Israeli technology company REE Automotive to jointly develop an electric propulsion system for battery-powered vehicles.
“I recognize we all need to be environmentally conscious, and we are, I think,” Dauch said during an Automotive News Congress Conversations webcast this month. And even though efficiency gains can still be made on the internal combustion engine, he added, “I’m also not fighting electrification. I think we need to bring the future faster.”
IHS Markit has endorsed that idea. In an April report on the outlook for battery-electric and plug-in hybrid vehicle acceptance vs. internal combustion engines, or ICEs, the forecaster concluded that EV “driving ranges continue to improve, and in most cases, are virtually no longer a restriction for consumers. Customers are used to a range provided by an ICE that is far beyond their requirements in most daily use cases. The last decade has brought significant cost reductions alongside lithium-ion battery technology advancements, and the next decade is expected to bring significant range improvements as solid-state batteries become the norm. As a result, IHS Markit believes that the ‘range anxiety’ problem will be solved by 2030.”
The report projected that the cost of manufacturing an EV will reach parity with that of combustion engine vehicles in 2027.
But is there anything close to an industry consensus about which way to move or how fast to do it?
Hardly.
A common mantra across brands everywhere is that “The internal combustion engine will remain with us for many years to come.”
The most recent spin of that reassurance came from Akio Toyoda, president of Toyota Motor Corp., one of the world’s largest automakers and a company that so far has been slow to embrace EVs as a full-on strategy. At a press conference last month to address a proposal in Japan to ban internal combustion engine vehicles by 2030, Toyoda warned that new technology should first be developed before there are attempts to restrict gasoline engines.
“What Japan should do first is to add to technological options,” Toyoda said. “I think setting regulations and introducing legislation come next. A policy on first banning gasoline and diesel cars would only limit such options, which would in turn lead to a loss of Japan’s strengths. That’s why I am asking for the understanding of policymakers not to get the order of priority wrong.”
Toyota said last month that it plans to introduce 15 electric models and a subbrand called Beyond Zero. But executives argue that more can done for the environment faster through hybrids than strict conformity to battery-powered autos.
Some automakers are making more limited moves toward EVs — perhaps not convinced of the strategy or maybe simply lacking the deep pockets and operating scale to pay for the radical transition.
Subaru Corp. is a case in point.
The Japanese champion of all-wheel-drive crossovers has been a steady market share climber in the U.S. for the past decade, earning a clubby following for its Outbacks and Foresters. But on the global stage, Subaru remains a relatively minor player, with just two assembly plants worldwide and little by way of a treasure chest to pay for advanced technology development.
Subaru is now promising that an electric crossover is coming through its pipeline. But Subaru is depending on Toyota — an investor and strategic partner — to develop it.
Subaru CEO Tomomi Nakamura told Automotive News at the end of last year that the EV is being created as a compliance car to meet California emissions regulations.
“For the U.S. market, we’re not sure how rapidly the EV market will grow. … We wanted to minimize our investment because we’re not sure how much profit this project is going to make,” he said.
But even among the most ambitious six automakers now proposing a complete changeover in propulsion technology, there is not universal zeal.
While General Motors has laid out a path to an all-electric Cadillac brand by 2030, its further aspiration for all of its brands to be electric-only by 2035 is conditioned on the market being ready to leave behind gasoline-powered pickups, SUVs and large crossovers.
And at Jaguar, it remains unclear whether the company will develop its planned EV platform in-house or turn to others for the work.
Either way, as gung-ho as Jaguar is to move fully into EVs, its utility vehicle sister brand plans to follow a different path: Land Rover will keep internal combustion engines in its biggest and most profitable vehicles well into the next decade.
The plan: All current vehicles will carry on mostly unchanged until the 2025 model year. The brand will then replace its entire lineup with electric vehicles built on a Jaguar-only platform. Going full electric is also a bid to move Jaguar far upmarket, making it a low-volume, extremely high luxury brand competing with Bentley.
2020 U.S. sales: 21,786 (estimated)
2020 U.S. market share: 0.1%
Early moves: The I-Pace high-performance crossover has shown there is a market for electric Jaguars.
Strategic advantages: Transitioning Jaguar to become a low-volume, high-priced brand could restore it to profitability. The change also would earn EV credits for parent company Jaguar Land Rover, which could be used to reduce potential carbon-emissions fines from the sale of internal combustion engine-powered Range Rovers.
Challenges: Chief Creative Officer Gerry McGovern’s team is charged with reinventing Jaguar’s design, and that will be no easy feat for the iconic line. Electric Jaguars will have to look like they have the chops to compete with Bentley and even some Rolls-Royce models. At the same time, Jaguar will be under a time crunch to fully develop the dedicated EV platform to pull off the plan. The platform has to be ready to go to market in just four years.
Finally, Jaguar will need some smart marketing to convince potential customers to take a chance on a super-expensive electric Jaguar — especially when the brand’s quality has never consistently been among the best in the industry.
— Richard Truett
The plan: Cadillac has pledged to launch an all-electric lineup by 2030. That will serve as a kind of beta test for an even bigger plan: General Motors itself wants to go all-electric by 2035, CEO Mary Barra said this year.
Late last year, Cadillac offered its dealers buyouts from $300,000 to more than $500,000 if they preferred not to be EV retailers. About a fifth of Cadillac’s nearly 900 U.S. dealers accepted the offer and will wind down their new-vehicle sales operations by the end of 2021.
2020 U.S. sales: 129,495
2020 U.S. market share: 0.9%
Early moves: Cadillac revealed the Lyriq midsize crossover concept in August and the production-ready vehicle in April. Production is scheduled to begin in the first half of 2022 in Spring Hill, Tenn. Cadillac has also teased its future electric flagship sedan, the Celestiq, which is expected to go on sale in 2023.
Strategic advantages: GM and LG Energy Solution plan a second U.S. battery manufacturing facility, near the Spring Hill plant, to produce proprietary Ultium batteries. GM estimated the batteries would give the Lyriq a 300-mile range on a full charge.
Challenges: Cadillac will have to stoke demand in the market before its portfolio becomes fully electric. And making the iconic Escalade SUV an electric vehicle will take some doing, underscoring the larger challenge of transforming all of GM to EVs, with its truck-heavy portfolio. But for now, Cadillac has begun training its dealers on EV sales and service and connected them with consultants to upgrade their facilities. GM also continues to develop Ultium batteries for faster charging and longer range, and the automaker has partnered with EVgo and other charging networks to expand infrastructure nationwide.
— Hannah Lutz
The plan: Mini will become an all-electric brand by early 2030, and the British marque will roll out its last new combustion engine variant in 2025.
2020 U.S. sales: 28,138
2020 U.S. market share: 0.2%
Early moves: Mini launched an all-electric version of its Hardtop last year. The Mini Cooper SE is powered by a 32.6-?kilowatt-hour battery that delivers about 110 miles of range on a full charge.
Strategic advantages: With its instant torque, the electric powertrain plays to Mini’s fun-to-drive ?small brand image. ?And recast as a portfolio of zero-emission vehicles, Mini will be pitching to its existing strength with “in-town” clientele as major cities around the world look to restrict or ban combustion engine vehicles.
Challenges: The brand has been facing an existential crisis in the U.S. — a market that favors roomy crossovers and brawny utility vehicles. It will likely have to remain a niche player as it transforms its powertrain strategy. Another challenge will be squeezing enough batteries into its small cars to overcome American drivers’ range anxiety.
— Urvaksh Karkaria
The plan: Volvo will become an all-electric brand by 2030. The transformation will usher in a new approach to retailing, with Volvo moving to an online-only, fixed-price sales model for its battery-powered vehicles.
2020 U.S. sales: 110,129
2020 U.S. market share: 0.8%
Early moves: Volvo launched its XC40 Recharge P8 battery-electric vehicle in the U.S. this year. A second electric product, a crossover, is expected to arrive in the second half of 2021.
Strategic advantages: Volvo’s parent company, Zhejiang Geely Holding Group, has shown a strong commitment to electric vehicles, creating two brands that will be electric-only — Polestar and Zeekr. This year, Volvo and the Geely Automobile unit said they would combine their powertrain operations and increase their global cooperation on EV technology.
Challenges: Volvo faces a wave of competition in the luxe EV space. It is already experiencing dealer unrest with its EV retailing strategy. Some retailers are concerned that they could be relegated to delivery and service agents. More broadly, parent Geely must articulate how Volvo’s EV-only future aligns with the Polestar brand. This is a conflict point for dealers who want to be able to retail Polestar vehicles from their Volvo stores, rather than having to build standalone showrooms for the new brand. How EVs are retailed is an unresolved issue around the industry.
— Urvaksh Karkaria
The plan: Ford Motor Co. is preparing for a wave of electric vehicle introductions in many markets, but it will fall to its Ford of Europe business to show the way to a complete transition. The European unit has committed to selling battery-electric vehicles only by 2030, with its commercial vehicle range 100 percent zero-emission capable, all-electric or plug-in hybrid by 2024. All of the unit’s passenger vehicles will be so by 2026.
2020 European sales: 974,982
2020 European market share: 7.1%
Early moves: The company made its first step into the field with last year’s Kuga crossover, which comes with a plug-in hybrid, a mild-hybrid or a full-hybrid powertrain.
Strategic advantages: Ford Motor Co. is solidly behind the European strategy and is already spending big on long-term EV development. This year, the U.S. home office said it will nearly double its investment in electrification to $22 billion through 2025, with a majority of that money dedicated to battery-electric models. That funding does not include development of EV batteries, which Ford intends to work on as an area of core in-house expertise.
Ford of Europe will get another technical leg up from competitor Volkswagen. The first, and possibly also the second, Ford EV in that region will be built by Ford on Volkswagen Group’s MEB electric platform.
Challenges: Even though Ford has scaled back in Europe since 2019, reducing head count, bringing down costs, closing five factories and selling a sixth, the new product strategy will be a major endeavor. Ford is investing $1 billion in a new EV manufacturing center in Cologne, Germany, to build a high-volume all-electric passenger vehicle for European customers starting in 2023. The organization has a portfolio of legacy European production lines, including operations that support its popular diesel engine commercial vans.
— Lindsay Chappell
The plan: Honda Motor Co. revealed last month a path to offering only electric powertrains by 2040. Honda has considerable work to do, given its lack of an existing electric vehicle portfolio and the volume involved: 4.4 million passenger vehicles produced worldwide in 2020. It will introduce its first two electrics in North America as 2024 model vehicles. In the second half of the decade, it will launch a series of electrics on a platform called e:Architecture.
2020 U.S. sales (Honda and Acura brands): 1,346,788
2020 U.S. market share: 9.2%
Early moves: Honda’s mission will begin to unfold in 2023. But last month at the Shanghai auto show, the automaker unveiled the e:Prototype crossover, which it said would become the first Honda brand EV in China.
Strategic advantages: Since Honda does not produce any full-size pickups or body-on-frame architectures, its transformation to all-electric should be less jarring to consumers than for its more truck-heavy competitors. A key to starting that transformation will be General Motors. The U.S. giant is partnering with Honda to develop the Japanese company’s first two EVs, one for the Honda brand and one for Acura.
Challenges: Honda was an early player in hybrids and even an early champion of hydrogen power, but it never established a reputation for alternative-power vehicles. Honda also faces an issue with production scale, since it has some of the industry’s biggest volume multimarket products, including the Civic and the CR-V crossover. The CR-V alone racked up more than 830,000 sales worldwide last year. Creating its maiden EV supply chain will be complicated. What’s more: Honda intends to simultaneously convert its sizable global motorcycle production to all-electric.
— Lindsay Chappell