Honda's e: 2W plans
Have they been deliberately lazy?
If the world changes and you are fashionably reluctant to, will you maintain your hegemony? That’s the story of Honda. The Japanese behemoth has more than 35 percent of the global two-wheeler market. However, it has had next to zero electric scooters until now. With the kind of resources and R&D infra that Honda has, we wonder if the late entry into electric two-wheelers is a deliberate ploy. Is the delay aimed at making a much bigger play that helps maintain and eventually improves Honda’s huge market share?
Or is Honda caught in the headlights?
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This is Week 17 of this newsletter. Connect with us at editor (at) insightev.com.
Long ago, when Nissan was still a force to reckon with, a Toyota executive admitted to this Editor that “Nissan is the only company from Japan we fear.”
This was about two decades back, and there has been a lot of water under the bridge since then.
Last week, when we mentioned Yamaha’s new patent filings for electric motorcycle cooling, we also thought about Honda, the biggest Japanese two-wheeler manufacturer. Somewhere, a Honda executive would have the same thoughts about Yamaha. The ‘three-prongs’ brand has been a worthy competitor in nearly every market, from North America to Europe and India to ASEAN. Arguably, Yamaha has more chutzpah, while Honda plays safe, barring some streaks of wildness (Rune, Zoomer) now and then.
More importantly, Yamaha is leading the development of electric technology. It is already an electric motor supplier, having developed motors with a 35 kW to 350 kW rating. The recent patents on liquid-cooled batteries indicate that Yamaha has now developed a full suite of electric technology. They now have to combine these technologies to make a high-end motorcycle.
Yamaha's efforts at the commuter end have been a bit lackluster. Three scooters—NEO’s, EMF, and EC-05—are sold in some markets. The EMF and EC-05—sold in the Taiwan market—use Gogoro batteries and motors. Clearly, Yamaha has not yet started operating in the commuter segment of the market.
But what about Honda? Arguably, it has more at stake than Yamaha. Yet, it seems to be an even more laggard.
Honda has a challenging environment. The brand occupies 35% of the global two-wheeler market share. Most of Honda’s domination comes through commuter machines—the Beat scooter in ASEAN, the SH125 large-wheel scooter across ASEAN and Europe, and the Activa scooter in India.
All is well if the world stays the way it has been. However, if everyone decides to go electric, and if electric has such low barriers to entry, Honda will lose market share…a lot of it.
Arguably, any future Honda strategy around electric two-wheelers would be around the core idea of preserving market share.
The Honda Way is the polar opposite of the electric way.
When it comes to ICE two-wheelers in the mass-market commuter segment, Honda has had a strategy of patiently working on the engineering of products that then become market leaders and stayed that way for many years. The Indian market Honda Activa commuter scooter is a prime example. It was introduced I
n the Indian market in 1999 and has been on sale continuously. Upgrades have been minor; nearly 80 percent of the present scooter can trace its origin back to 1999. Barring the first couple of years, the Honda Activa has been the scooter market leader in India, continuously outselling the entire competition combined in most years. Its strong market leadership has allowed Honda to go by not updating the Activa significantly.
The electric market is quite different. The churn of models every year is higher, and the rapid development in tech means E2Ws change comprehensively every 3-4 years, mostly software-driven, if not in hardware. This rapid pace of change would likely be a cul;turla shift for Honda.
What works for Honda?
While Yamahas and Kawasakis are edgy, Honda has been known for making neutral, user-friendly machines. That works for the commuter end of the electric spectrum, as the excess weight often sacrifices nimbleness for stability.
Electric two-wheelers also experiment with shapes and form factors, often developing body types that are hard to define under conventional two-wheeler nomenclature. Honda has been doing the same with the Grom, the Zoomer, and many more models.
The geographically isolated nature of electric
The low entry barriers and the relative inertia of the incumbents have resulted in a global electric two-wheeler market in which no brand can claim domination. Yadea, AIMA, Sunra, and a few more brands dominate the scene in China. Go to Europe, and there are no dominant brands - VMoto, Niu, Sur Ron, and a few more sell some numbers, but none can be called a dominant market leader.
India seems to be the only market where we see a single brand dominance of the electric two-wheeler market—Ola Electric has a nearly 50 percent market share, which fluctuates wildly depending on the month you check the data for. But yes, between Ola, TVS, and Bajaj, we see about 80 percent of the market cornered and considering that the market is in nascent stages, this ranking may change considerably.
Meanwhile, ASEAN's homegrown players—Vinfast, Gesits, Pega, Dibao, Anbico, and Yadea—collectively dominate the market.
It should be noted that the companies that dominate the headlines—Livewire, Zero, Energica, Verge, etc.—have very small sales numbers. Even the bigger names like Niu and VMoto Soco are rather small when it comes to sales volumes. The biggest manufacturers remain the Chinese factories that would happily white-label for anyone.
The above trends indicate that no brand comes close to global domination. ICE Honda did well by becoming a dominant market leader in Japan, China, ASEAN, LatAm, Europe, and India. The same is not true for electric.
But when Honda aggressively enters electric, would the landscape change?
History of electrification
It’s not that Honda hasn’t done anything—the brand has been experimenting with electric scooters for some time. Honda first toyed with electric two-wheeled mobility in 1994 with the CUV ES. This Japan-only model used Ni-Cad batteries to deliver a claimed range of 61 km.
For many years after that, Honda did nothing.
It was only in 2009 that they launched the EV-neo. This was a business-only scooter that Honda sold/deployed in very limited numbers to test and develop electric vehicle technology. Think of the EV-neo as the precursor to the Benly e: and Gyro e: scooters.
Current electric portfolio
Then came the PCX. Honda has sold the PCX Electric scooter in Indonesia, Thailand, and the Philippines ASEAN markets since 2018. However, after the launch of the PCX, there has been a mild follow-through from the brand and not the aggressive product rollout strategy that Honda is known for. In 2022, the PCX Electric sold about 4,200 units in these markets, the only markets in which Honda sold the PCX.
Honda has since withdrawn the PCX Electric from most markets but maintained its electric presence with the EM1 e: range. The model has also been introduced in Europe.
Business Scooters
Meanwhile, in 2020, Honda launched a range of cargo scooters for business applications. These included the Benly e: scooter, the Gyro e: three-wheeled scooter, and the Gyro Canopy e: three-wheeled scooter with a canopy. Japan remains the primary market for these.
At the performance end, Honda has been testing and racing the CR Electric Moto for some time in the FIM E-Xplorer World Cup.
In short, this is the current product portfolio:
Is there a Global Strategy?
All that appears significant, yet we find it disjointed. Honda has different strategies for various markets. The Chinese operations are quite different from the global operations. The Chinese JVs (two of them—Sundiro Honda and Wuyang Honda) are also a bit ahead in the electrification journey, having minds of their own. In fact, the EM 1 e: scooter is a re-engineered version of the Sundiro Honda U-Go scooter outfitted with the Honda MPP.
The disjointed localized strategies connect at the HQ for the rest of the world. The connection is Honda’s Modular Power Pack (MPP), a Gogoro-esque battery pack that is the foundation of Honda’s future electric two-wheeler strategy.
We take a pause here for today. This is Part 1 of our analysis of Honda’s snail pace in developing electric two-wheelers. Next week, we will examine Honda’s strategy in various markets and see if everything is going according to plan.
InsightEV’s upcoming Global Landscape and Prospects—Electric Two-Wheelers and Urban Mobility report details Honda and 214 more manufacturers/startups. Please message us to request a sample company profile of Honda.