Honda's Strategy Is Electrifying Honda Motor Company, a Japan-based multinational and the world's largest motorcycle manufacturer, was founded by Soichiro Honda in 1937. Honda, a Japanese engineer and innovator, built Honda Motor Company from the ground up. The automotive manufacturer, which started with 12 employees retrofitting bicycles with engines, has grown to more than 218,000 employees producing 19 million motorcycles, nearly 5 million automobiles, and more than 5 million power products every year. Today, Honda continues to innovate as the automotive market accelerates its transition to electric and hybrid technology.

Soichiro Honda always had an interest in vehicles. He founded Tokai Seiki (Eastern Sea Precision Machine Company) to make piston rings. Though he won a contract with Toyota, he lost the contract when it became evident that quality was lacking. He visited Toyota factories across Japan to learn more about quality control and perfect his product. Eventually, he created acceptable pistons using an automated process that could employ unskilled war-time laborers. At the start of World War II, Tokai Seiki was placed under the control of the Ministry of Commerce and Industry, and Honda was demoted at his own company. After the war, Honda sold what remained of Tokai Seiki to Toyota and used the profits to open the Honda Technical Research Institute.

With just a dozen employees in 1946, the company built and sold motorized bicycles using the former Imperial Army's generator engines. Demand was high, and the Honda Technical Research Institute soon ran out of stock. The company set out to make its own engine. Honda liquidated his business and used the money to incorporate Honda Motor Company. Its first complete motorcycle, the Honda 1949 D-Type, was just the start. The company grew to become the largest manufacturer of motorcycles by 1964.

In 1959, Honda Motor Company expanded into North America, opening its first overseas subsidiary in Los Angeles. Around this time, Honda opened Honda R&D Co., Ltd. to independently focus on research and development. Over the next several decades, Honda Motor Company continued to expand its product lines as well as operations and exports, opening its first overseas production facility in Belgium and becoming the first Japanese car manufacturer to open a production facility in the United States. Honda is now a household name with a reputation for producing quality cars and motorcycles.

Though Honda Motor Company is the world's largest manufacturer of internal combustion engines, it has had its sights set on new mobility for decades. In 2002, the company offered customers in the United States and Japan the Honda FCX, a fuel-cell powered car. Regulatory change and shifting consumer behavior in Europe have accelerated Honda's long-term electrification plans for the region, a strategy the company calls "Electric Vision." These changes have pushed Honda to introduce electrified powertrains for all of its European mainstream models several years ahead of schedule. Additionally, the company's advanced two-motor hybrid technology seen in the Honda Jazz hatchback and CR-V Hybrid has been met with acclaim across Europe. In a traditional hybrid model, an electric motor assists the car's engine, but in the Jazz hybrid electric vehicle, an electric engine assists the motor.

In the United States, on the other hand, Honda has a long road ahead to an electric future. Honda phased out the Clarity EV, its only all-electric car in the U.S. market at the time, leaving its fuel-cell and plug-in hybrid models. Buyers were unimpressed with its 89-mile driving range. In contrast, both the Chevy Bolt EV and Tesla Model 3 travel around 240 miles. To focus on the next generation of products, Honda partnered with rival General Motors (GM) to create two new all-electric vehicles using GM's proprietary Ultium battery and hands-free driver-assist technology wrapped in Honda's design. Strategic alliances such as this allow companies to pool resources, combine scale and manufacturing efficiencies, and create a competitive advantage.

By 2030, the majority of Honda's cars will be electric, zero-emission vehicles. Though there is still much progress to be made in the United States, Honda is quickly bringing its Electric Vision strategy to life in Europe. Additionally, Honda stands to greatly benefit from its strategic partnership with GM. Honda Motor Company's long history and its reputation for quality show that Honda is a company that knows how to innovate and adapt.*

Questions How did Honda Motor Company build its reputation for producing quality cars and motorcycles?

What are the advantages of Honda's strategic alliance with GM?

How is Honda adapting to regulatory change and shifting consumer behavior in Europe?