Honda and GAC to construct $430 million Chinese plant for new-energy cars

Honda Motor’s joint venture with GAC Group is going to invest 3.27 billion yuan ($469 million) in new-energy vehicle production in China, GAC stated in a stock exchange filing on Wednesday.

The move is part of Honda and GAC’s target to meet China’s tough green car quotas.

The Honda-GAC joint venture is going to construct a new plant with capacity to produce 170,000 new-energy vehicles annually, the filing stated. New-energy vehicles consist all electric battery cars along with plug-in hybrid vehicles.

A source near the joint venture stated that the plan envisages Japan’s Honda producing GAC’s Trumpchi GS4, a battery controlled compact SUV, to sell through Honda outlets operated with GAC.

The Honda-produced vehicle is likely to be sold with the Trumpchi badge instead of Honda’s, the source stated, refusing to be named because he is not authorized to discuss on the matter.

It is a very unusual arrangement but gives a quick way to meet Beijing’s requirements for such vehicles to account for 10 percent of an auto manufacturer’s production by 2019.

The deal is same as an earlier one between Toyota Motor and its regional partner. Toyota showrooms will sell an electric vehicle without the Japanese company’s unique triple-oval logo. Instead, it will show the label of its Chinese partner GAC and be construct using GAC’s lower-cost technology.