Honda secures battery supply contract for about 1 million electric vehicles with CATL

Honda hasn’t been one of the most active automakers when it comes to electrification, but it is now making some big moves, including securing a battery cell supply contract for about 1 million electric vehicles with CATL, one of the largest battery manufacturers in the world.

Yesterday in Tokyo, Contemporary Amperex Technology Co., Ltd. (CATL) and Honda signed “a cooperation agreement to formally cooperate to develop electric vehicles for the future market.”

The two companies had already been working together.

Last year, it was reported that Honda is working on an affordable all-electric Fit-based car with CATL for a global release.

Naosumi Tada, head of CATL’s Japanese subsidiary, commented:

“Customer-centered is the philosophy that CATL has always insisted on. We hope that we can establish more efficient communication channels, more timely response mechanisms, and establish a closer relationship for further cooperation. Honda and CATL have been worked closely on advanced and reliable battery solutions for Honda’s future electric vehicle applications. In the future, we will support Honda not only in China, Japan, but also to create world-leading electric vehicles that serves global consumers.”

Now as part of the new agreement, CATL is guaranteeing Honda a supply of “about 56 GWh of lithium-ion EV batteries before 2027.”

Based on an average battery pack size of 55 kWh, it would be enough batteries to produce about 1 million electric vehicles.

When it comes to all-electric vehicles, Honda doesn’t have much going on right now, but they plan to change that starting at the end of this year with their first new standalone all-electric vehicle.

As for CATL, it is rapidly becoming an important player in the EV space.

CATL is primarily using LiFePo and NCM chemistries in prismatic cell formats and their batteries have been mostly going to electric bus production and plug-in hybrids. But they have been expanding their reach lately and announced several new battery factories to support major automakers.

They signed a supply contract with SAAB successor National Electric Vehicle Sweden (NEVS) in order to enable the production of hundreds of thousands of all-electric cars per year.

BMW also signed a $1 billion battery supply contract with them to support their future EV production.

Electrek’s Take

It may sound like a lot, but the way I read the statement, it sounds like 56 GWh through 2027, which means an average of 7 GWh secured per year over the next 8 years.

That’s not really a lot.

Tesla is already consuming at a rate of over 25 GWh of battery cells per year for its vehicles and it is expected to rapidly increase over the next few years.

Therefore, it’s a big investment for Honda relative to what they have been doing in the space before, but it’s not really aggressive compared to other players in the space.

Hopefully, we see them securing more contracts to support more ambitious EV programs.