Businesses beyond electrification

Issue #205, May 30, 2023

There are several business models evolving in the automotive sector or the broader mobility industry, beyond just electrification of vehicles. In the move towards software-defined vehicles, Honda will double its number of programmers to 10,000 by 2023. Toyota showed the world's first liquid-hydrogen race car in a 24-hour endurance race. French industrial gas supplier Air Liquide has built Japan's first Hydrogen refueling station. Ford says 12% of its total connected vehicle base customers pay for software subscription services offered by Ford Pro, the automaker's commercial unit - 60% more than the figures last year. In the constantly evolving search for lower material costs and higher energy density, Chinese firm Ronbay has led a shift from cathodes with a lower nickel content to better performing high-nickel cathode materials. Toyota and Daimler will combine their truck business in Japan for economies of scale in research. Here are the details of these updates over and beyond electric vehicles (EV) initiatives.

Honda's software-defined business

Honda will double the number of software programmers to 10,000 by 2030 in a shift away from traditional manufacturing toward a software-driven business. In a fresh software-related push, the automaker will strengthen its partnership with KPIT Technologies, an Indian software developer. The revised partnership will see the number of software engineers increase by 1,100 to 2,000. - Nikkei Asia

Toyota's liquid-hydrogen race car

The next generation of alternative, so-called carbon neutral fuels were the center of attention on and off the track over the weekend during a race in Japan. Fuji International Speedway hosted the latest installment of the Super Taikyu Series, a 24-hour endurance race featuring dozens of cars across several divisions separated by engine size and speed. In the experimental class, Toyota fielded the world’s first liquid-hydrogen race car. - Bloomberg

Hydrogen refueling stations

French industrial gas supplier Air Liquide built a hydrogen refueling station in Japan to serve fuel cell vehicle taxis, a move intended to promote the adoption of environmentally friendly FCVs among commercial vehicles. Air Liquide converted a liquefied petroleum (LP) gas station into a hydrogen refueling station. The location has been operated by the Kobe MK taxi service, and it appears to be the first hydrogen refueling station for cabs in Japan. - Nikkei Asia

Ford's subscription service

As automakers work to convince dealers and investors that they can generate big profits by charging monthly subscription fees for software-based services, Ford is proving the business model to be more than theoretical — at least with some buyers. Roughly 400,000 customers, or about 12 percent of its total connected-vehicle base, now pay for subscription services offered by Ford Pro, the automaker's commercial unit. That's 60 percent more than just a year ago, and Ford thinks it can triple that figure to 1.2 million by 2026. - Automotive News

Cathodes in EV batteries

A Chinese billionaire with a fascination for metallurgy is posing a fundamental challenge to a traditional auto industry in the development of EVs and batteries. Bai Houshan, the founder and chair of Ronbay Technology dominates a key part of the global market for cathode electrodes, which are core building blocks in EV batteries and account for 30 to 50 per cent of component costs. With battery chemistries and components constantly evolving in the search for lower material costs and higher energy density, Ronbay has led a shift from cathodes with a lower nickel content to better-performing high-nickel cathode materials.

Daimler Truck Holding and Toyota Motor Corp have struck a preliminary deal to combine their truck units in Japan. The companies see the tie-up as an opportunity to achieve the scale they need to make technological advances, Daimler Truck CEO Martin Daum said recently. "We are accelerating towards zero emissions, but there is one major challenge and this is the required funding," Daum said. "There is only one way to make this parallel tech development work: economies of scale." - Nikkei Asia

Consolidation for economies of scale

Toyota and Daimler Truck will combine their truck businesses in Japan and share expertise on using hydrogen and next-generation technologies in commercial vehicles as part of efforts to cut carbon emissions. The "big challenge" was having to simultaneously fund multiple new technologies, from batteries to fuel cells and internal combustion engines using hydrogen, and focusing on achieving economy of scale to meet those goals, Daimler Truck CEO Martin Daum said. The two brands combined would lead to a "scale merit," accounting for about 10% of global market share. - Nikkei Asia