TOKYO -- Honda Motor will team up with Contemporary Amperex Technology, the world's largest battery maker, to develop an electric vehicle that it sees as key to its global strategy.
The project will develop batteries and related technologies to be used mainly in the new electric car, which will be introduced in China and elsewhere by the first half of 2020.
The effort reflects a growing trend toward using Chinese suppliers for important components, amid a global shift to electric vehicles.
The two companies will develop the car based on Honda's Fit minivehicle. The goal is to create an affordable electric car priced at slightly more than 2 million yen ($18,000) equipped with a small battery and having a relatively short range of 300km on a single charge.
Honda aims to sell more than 100,000 of the cars a year, making it the company's top-selling electric vehicle.
The Sylphy Zero Emission, an electric car Nissan Motor plans to roll out in China by 2018, will also use batteries made by CATL, which has benefitted from deals likely to lead to many orders as more electric vehicles hit the streets.
Honda plans to work with CATL in other areas as well, including electric vehicle performance testing, production technology and battery specifications. The automaker hopes to work with the Chinese company on future electric cars.
Honda's current minicar and minivan lineup includes gasoline hybrid vehicles from a joint venture that it set up with Japanese battery makers Panasonic and GS Yuasa. The Japanese carmaker said it intends to maintain those relationships.
Honda aims to raise the combined share of electric and plug-in hybrid vehicles to about 65% of total sales by 2030.
Beijing's campaign to promote electric vehicles is fueling CATL's rapid growth. The company is forecast to have the largest share of the global automotive battery market in 2018 by shipments, at 19%, ahead of Panasonic's 15.5%, according to Tokyo-based Techno Systems Research.
The Chinese company is planning to more than double its capacity to 50 gigawatt-hours by the end of 2020.
Panasonic, South Korea's LG Chem and Samsung SDI were pioneers in automotive battery technology but were slow to enter China, the world's biggest electric car market. Overseas manufacturers have been hampered by Chinese government policy, which subsidizes electric cars equipped with batteries made by local manufacturers. That has given companies such as CATL and BYD an edge in the market.
Both Chinese carmakers, such as Beijing Automotive Group and Zhejiang Geely Holding Group, and overseas manufacturers, such as Germany's BMW, are using Chinese batteries, forcing their Japanese and South Korean rivals to battle for market share.