Honda looks set to enter into an agreement to create electric powertrains in a joint venture with Hitachi Automotive Systems following the signing of an initial Memorandum of Understanding.

The two companies are now set to conduct formal discussions regarding the establishment of the new company concerned with the development, manufacture and sales of motors for electric vehicles, with a deal expected to be done by the end of March.

A statement issued by Honda said that, since the brand launched its first hybrid car, the Insight, in 1999, the company has “focused on expanding its electric vehicle line-up as it continues to enhance its technological and production capabilities with respect to the motors that form the core component of electric vehicles”.

It added: “Going forward, with environmental conservation measures and regulations increasing on a global scale, the market for electric vehicles is expected to continue to grow.

“Based on this direction, the two companies signed the MoU with the aim of using the collaboration between a vehicle manufacturer and supplier to generate technological synergy and economies of scale that will strengthen their competitive advantage and business foundation for the motors at the core of an electric vehicle system.”

Hitachi Automotive Systems first started selling motors for electric vehicles in 1999 and has been refining its capabilities to develop high-output, lightweight and compact electric vehicle motors.

The company has delivered motors to vehicle manufacturers in Japan and throughout the world, and has earned high praise throughout the industry for the performance of these products and its production technology.

Subsidiary operations of the new Japan-based joint venture, which is set to be based in Hitachinaka City, Japan, are planned for the United States and People’s Republic of China, each with manufacturing and sales functions.

Together with the establishment of these operations, the new company will expand the global supply of motors by creating a robust response to demand from Honda and other vehicle manufacturers.

A statement said that Hitachi Automotive Systems would continue to promote its business operations by maintaining the business relationships it has with vehicle manufacturers that receive their supply of motors from the company in parallel to the efforts of the new company.

Honda, meanwhile, will continue to focus on the global promotion of electric vehicles by using motors from the new company as well as the motors it currently manufactures itself in Japan.