The Japanese government will provide $1.8 billion in subsidies for batteries and chips

On April 28th, Japanese Minister of Economy, Trade and Industry Yasutoshi Nishimura announced that Japan will provide up to 1.8 billion USD in subsidies for a series of battery and chip-related projects, in its latest effort to strengthen supply chain security.

Nishimura told reporters that the government plans to provide subsidies of up to 184.6 billion yen (approximately 1.38 billion USD) for eight proposals related to power batteries, and up to 56.4 billion yen for two projects related to semiconductors.

The subsidy program will benefit Honda Motor Co. and Japanese battery maker GS Yuasa Corp., with an investment of about 430 billion yen to promote the production of power batteries, with Honda and GS Yuasa potentially receiving up to 158.7 billion yen in subsidies.

According to Nikkei, Honda and GS Yuasa will first build a new factory with a target capacity of at least 20GWh, but the location of the factory has not been disclosed, and Honda and GS Yuasa have declined to provide details. Nikkei reported that the joint venture established by the two companies in January will play a key role in battery and material development and investment.

At a recent annual briefing, Honda Motor Co. President Toshihiro Mibe admitted that the company is falling behind in the global competition in the electric vehicle field. He said that at the recent Shanghai Auto Show, Honda executives saw local Chinese brands exhibiting various sophisticated and advanced electric vehicles in their booths. "They are ahead of us, even beyond our expectations," said Toshihiro Mibe. "During the COVID-19 pandemic, electric vehicles in China have achieved rapid development."

After 2025, Honda plans to introduce three new types of batteries to the market: the next-generation liquid lithium-ion battery, the semi-solid-state battery, and the all-solid-state battery. Honda is working with GS Yuasa to develop next-generation lithium-ion battery technology that will have higher capacity and output than current batteries. Honda has also reached a battery supply agreement with Envision AESC and is collaborating with LG Energy Solution to establish a joint battery plant in the United States, which is scheduled to open in 2025. Nikkei added that Honda will also purchase batteries from CATL before 2030.

In 2022, Honda announced that it will invest 5 trillion yen in electrification over the next 10 years, launching 30 electric vehicle models globally and establishing an annual production capacity of 2 million electric vehicles by 2030. Honda plans to phase out internal combustion engines by 2040 and only sell electric and hydrogen fuel cell vehicles by then.