Honda does a 180 on Plug-in Electric Vehicles

In 2007, Honda CEO Takeo Fukui announced that Honda was not interested in plug-in hybrids because the emissions reductions would not be good enough, and battery electric vehicles (BEVs) cannot deliver the range that consumers want. He reiterated this in 2008 saying that BEV technology was immature and commercialization would be difficult. In May 2010, Honda's President of Research and Development, Tomohiko Kawanabe, told Bloomberg News that "We are definitely conducting research on electric cars, but I can't say I can wholeheartedly recommend them." It sounds like an open and shut case: Honda is not interested.

However, Honda's CEO left and was replaced by Takanobu Ito. The company started showing a small BEV concept car, the EV-N, with no hope for production. In October 2009, Ito said that Honda would consider developing a BEV for the U.S and European markets. While a move in the right direction, it was still a far cry from the ringing endorsement of plug-in vehicles that Chrysler, Ford, GM, Nissan, and Toyota had given at that time.

All of that changed this July when Honda announced they would have a plug-in hybrid and BEV in 2012. Last week, Honda announced that Ito personally would unveil a BEV concept at the Los Angeles auto show (notably the same show where Toyota will unveil the new RAV-4 EV). Ito is now quoted as saying, "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." However, Ito continues to push Honda's view that hydrogen fuel cell vehicles are the ultimate and better solution.

So, why the about face to include BEVs and plug-in hybrids in their product plans? One reason is likely because Honda needs to hang on to the credibility as an environmental automaker. It's no secret that the Honda Insight has struggled to compete with what has become the gold standard for hybrids, the Prius. Now Ford's Fusion Hybrid and soon Hyundai's Sonata Hybrid top the Accord in mileage. Honda had been the most fuel efficient automaker in the U.S. for several decades, until Hyundai took the title in 2009.

Additionally, Honda is forced to purchase zero emissions vehicle credits to continue selling in California. Honda may have finally decided that they have to play a part in the BEV and plug-in hybrid market to remain competitive in the U.S. Perhaps this is also Honda's acknowledgment that fuel cell vehicles remain too far off to sit on the sidelines and wait for their commercial viability.

Source: Reuters