Honda shifts strategy, seeks to bring EV value chain in-house as earnings climb

TOKYO – Honda is revising its approach to next-generation electric vehicles and will pursue a vertically integrated approach that brings everything from batteries and software to vehicle production in-house, as the company races to rein in costs as it wrestles with new technologies.Honda, Japan’s second-largest automaker, needs to adopt this approach to better compete, CEO Toshihiro Mibe said Friday while announcing financial results.

The profitability of hybrid models is already on par with gasoline-only models, executives said. Their cost is also dropping rapidly, Honda said. Mibe’s assessment came as Honda announced record fiscal year operating income. Operating profit at Honda surged 77 per cent to 1.38 trillion yen in the 12-month period, while net income jumped 70 per cent to 1.12 trillion yen .Honda benefited from pent-up demand in the U.S. as the global semiconductor shortage eased. The company’s focus on hybrids is also stoking profits.

Sales in Asia, the company’s top market, dipped 5.3 per cent to 1.65 million on weaker demand in China. Deliveries in Europe increased 23 per cent to 103,000 vehicles.Fast-selling large-sized vehicles in the U.S. tilted Honda’s product mix toward higher-margin models. Honda’s U.S. truck sales grew 20 per cent to 220,853 in the January-March quarter. Today, about 66 per cent of Honda and Acura sales in the U.S.

Over the past year, the yen has lost 14 per cent of its value against the dollar. Still, Honda hasn’t benefited as much as its Japanese competitors.

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