Europeans Aren’t Buying The Honda E So Now Honda Has To Team Up With Tesla

Europeans Aren’t Buying The Honda E So Now Honda Has To Team Up With Tesla

Honda is humming the tune of the Jackson 5’s “ABC” today as it combines efforts with Fiat Chrysler and Tesla to comply with emissions standards in the EU. It is likely that Honda is joining FCA and Tesla because of lower-than-expected sales of its BEV, the Honda E. As reported by the Japan Times, Honda is joining a pooled fleet with its competitors:

Honda was newly added as of last week to a European Commission filing in which manufacturers declare their intent to jointly meet greenhouse-gas emissions standards. The Japanese automaker’s entry into the other two companies’ pooled fleet won’t change the conditions of a three-year agreement reached with Tesla in 2019, a Fiat Chrysler spokesman said.

It is unclear how much money Honda is paying to join a pool populated by Tesla’s all-electric fleet. Selling regulatory credits to other carmakers has been a boon to the Model 3 maker, bringing in almost $2 billion (¥126 billion) of revenue this year.

The Japan Times cites a smaller blog from European auto analyst Matthias Schmidt, who pinpointed poor sales of the Honda E as being a big part of the problem:

According to exclusive Schmidt Automotive Research, sourcing official European Commission data, Honda that have had a lacklustre start from their Honda E electric model, have now decided to join the open FCA pool and benefit from Tesla’s zero emission CO2 balance, and consequently boosting Tesla’s regulatory credits further, which totalled just under $US1.2 ($2) billion this year already .

According to the monthly European Electric Car Report published each month, Honda have registered just 1,000 Honda E BEV vehicles across Western Europe so far this year which accounted for just 2 per cent mix of their total regional registrations.

Tesla’s lucrative regulatory credits aside, the takeaway is that Honda is taking steps, plural, to reduce its average emissions. Big Red’s strategy here seems as easy as 1-2-3, and Tesla’s “gonna show [them] how to get an A!

Step one is joining FCA in pooling fleet emissions reporting with Tesla. The combined EV fleet will help both Fiat Chrysler and Honda reach the average emissions metric outlined in new EU regulations, which mandate that average emissions cannot exceed 95 grams of carbon dioxide per kilometre.

But Honda is not relying solely on Tesla’s credits to reduce its average emissions. Step two is supposed to be reducing overall emissions with the sale of hybrid versions of the CR-V SUV and Jazz (read: Fit) subcompact. Step three, finally, is the introduction of the Honda E model. Which, sadly, has not been enough to offset emissions of Honda’s gas-powered fleet, thus the Honda/FCA/Tesla coalition.

The gloomy side of all this is that the Honda E is underperforming in its market segment, as noted in Schmidt’s article, and if that EV knockout is not flying out of showrooms, well shit, what will? The E looks like something straight out of Masamune Shirow’s imagination, or like it manifests into existence in a cloud of smoke from a Capsule Corp DynoCap. Which is to say, it’s objectively awesome. It makes me as excited about EVs and Big Red’s commitment to sustainability as the Insight did two decades ago. Yes, the Honda E is a full-blown EV and not a hybrid like the first-gen Insight, but the E feels more like a spiritual successor to the original Insight than the latter revisions have.

In contrast to that bit of bad EV news, there are the sales figures for the Renault Zoe we covered earlier this year. This clearly answers the question I posed before, and I don’t know how to feel about that because the Honda E would be my pick between the two. Tracking the figures further, it’s obvious that Renault is experiencing wild success with its own BEV. The Honda E has a long way to go to catch up to its French competitor.

The feel-good side may be that carmakers are, at the very least, heeding regulatory changes and are rushing together to meet the new standards in unconventional and creative ways. But until automakers can go it alone to reduce fleet average emissions, partly by increasing sales of hybrids and EVs significantly, it looks as if these kinds of agreements will be the norm — and carmakers will be shake, shake, shaking it together.