HTHIY Hitachi Ltd (PK)

By Sean McLain 

TOKYO -- Honda Motor Co. said it would team up with Hitachi Ltd.'s automotive-parts unit to build motors for electric vehicles, the latest collaboration between industry giants to keep abreast of rapid changes.

Honda, like other Japanese car makers, once jealously guarded its engine technologies. Now, it says it needs help.

"Rather than one company doing everything, it is important to gather the best parts and assemble them into one vehicle," said Honda Chief Executive Takahiro Hachigo at a news conference Tuesday.

The joint-venture company will be 51% owned by a Hitachi subsidiary, Hitachi Automotive Systems Ltd., and 49% owned by Honda.

Honda aims to derive two-thirds of its sales from hybrid gasoline-electric, battery-electric and hydrogen fuel-cell vehicles by 2030, Mr. Hachigo said.

The car-parts business is growing in weight at Hitachi, an industrial giant known for its power plants and trains.

The electrification of cars "has accelerated suddenly around the world," said Hitachi Automotive chief Hideaki Seki. He said Hitachi wanted a partner to share costs in the capital-intensive business.

The Honda-Hitachi joint venture is one of many technology tie-ups disclosed recently. Toyota Motor Corp. said Monday that it was considering teaming up with Suzuki Motor Corp. to work on self-driving vehicles. Honda said in December that it would work with Alphabet Inc. unit Waymo on self-driving cars.

Honda is lagging in hybrid and electric-vehicle sales. The company sold 218,000 hybrids globally in 2016, around 4% of its total sales. In the U.S., less than 1% of Honda's sales came from hybrid vehicles.

Only around half a million electric vehicles were sold in 2015, according to the International Energy Agency, but rapid growth is expected as many countries tighten emissions regulations.

While Honda will be a customer for the joint venture with Hitachi, it won't be an exclusive relationship. Hitachi will be free to sell motors produced by the joint venture to other car makers, Hitachi's Mr. Seki said.

Honda's Mr. Hachigo said the car maker would keep some electric-motor production in house, seeking to replicate past successes that distinguished Honda engines from the competition. But he said Honda didn't have the capacity to produce a large number of electric motors, while Hitachi does.

The joint venture envisions starting production at a Hitachi plant in Japan and eventually using a Hitachi plant in Berea, Ky., as well as a possible site in China.

Write to Sean McLain at sean.mclain@wsj.com

(END) Dow Jones Newswires

February 08, 2017 02:47 ET (07:47 GMT)

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