Honda Motor and Hitachi Planned to Form a Joint Venture

Honda Motor Co., Ltd. (NYSE: HMC) and Hitachi, Ltd. planned to form a joint venture to develop and sell motors for electric vehicles.  The joint venture is planned to be founded in July with $44.69 million investment. According to the two companies, 51% of the venture will be owned by Hitachi Automotive Systems, which is a wholly owned subsidiary of Hitachi, and 49% will be owned by Honda. The venture will develop, produce and sell motors that will be used in petrol hybrids plug-in hybrids and battery-electric cars.

“Producing motors is capital intensive, so rather than just manufacturing them for our own purposes, we would like to produce in large volumes with the possibility of supplying a variety of customers,” Takahiro Hachigo, the Chief Executive Officer of Honda, said on Tuesday.

According to Hideaki Seki, the Chief Executive Officer of Hitachi Automotive, the venture planned to manufacture and sell in the United States and China in addition to Japan, and they are considering using Hitachi’s current plants in the countries above.

By forming the joint venture, Hitachi could save costs, and both companies could combine their advantages to better compete in the “green” car segment.

Honda and Hitachi are not the only companies that formed joint ventures amid pressures from regulators for developing cleaner cars. Suzuki Motor Corp and Toyota Motor Corp signed an agreement this week for a business partnership.

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