This morning I am mostly observing the market. The dividend yield of HONDA is creeping toward 5%, which is interesting. For now, I’m surveying the news and doing very little.
The only move I made recently was starting a medium-sized position in JD Industrials. I’ll come back to that idea in more detail soon, along with a note on using ETFs for short exposure.
But today’s more interesting observation relates to Honda’s solid-state battery strategy.
Honda’s C-1 Production Line
A recent video showing Honda’s C-1 production line provides several useful insights into how the company is approaching solid-state battery manufacturing.
https://www.youtube.com/watch?v=mP4_NUzywq8
A few things stand out:
- Continuous slurrying instead of batch processing
- Intermittent deposition
- Roll-to-roll “sandwiching” architecture
The goal is clear: achieve low costs at scale through manufacturing efficiency. Historically, the continuous manufacturing process has MOST OF THE TIME had an advantage in various industries, we’ll unpack more on Honda for subscribers.
The equipment visible in the C-1 facility is stated to be industrial-scale equipment, not just laboratory tooling. In other words, the process being developed here should closely resemble the equipment used in the future D-1 mass-production facility.
The tentative timeline for larger-scale production is around 2028.
Between now and then, I expect significant volatility in the narrative and in the stock.
Why the Process Matters
The roll-to-roll sandwich process has another advantage: it reduces the required ultra-dry HVAC area, which is one of the most expensive aspects of battery manufacturing.
If Honda can minimize that footprint, the cost structure improves materially.
This is why I tend to favor manufacturing innovation over purely electrochemical breakthroughs. Continuous processes historically win in industrial scaling.
Another point: EV Strategy Is Shifting
Another important development in the industry is the shift toward cheaper EVs.
Many automakers attempted to follow the Tesla model of premium EVs, but that strategy is now showing cracks:
- Adoption of expensive EVs is slower than expected
- Tesla has little presence in the low-cost EV segment
- BYD is aggressively forcing costs down
BYD is essentially redefining the competitive landscape by demonstrating that mass adoption will likely come from inexpensive vehicles.
As a result:
- Several automakers are taking write-downs on previous EV investments (including Honda)
- Profit expectations in the sector are being compressed
- European manufacturers such as Fiat, Renault, Citroën, and Volkswagen are being forced to accelerate cheap EV models launches.
These cars are well suited for Europe’s narrow urban streets and for gig-economy drivers, as EVs have a much cheaper cost per mile.
Ironically, these write-downs may actually accelerate adoption, because they signal a shift toward lower-cost vehicles that consumers can actually afford.
Why Honda Is Different
My interest in Honda is slightly different from the typical EV story.
The real opportunity may lie in motorcycles first.
Motorbikes have several advantages as an early market for solid-state batteries:
- Massive global market
- Less regulatory burden than cars
- Lower risk and cost if battery failures occur
- Strong demand for high energy density and safety
Honda already has a dominant market share in motorcycles, which gives it a natural platform to deploy new battery technology.
The sequence could look like this:
- Motorcycles
- Cars later
Meanwhile, the company trades at a very modest valuation, and there is also the potential catalyst of large treasury share cancellations, something investors like Gabelli Asset Management have been pushing for.
Positioning
I am likely to add slightly to my position, but this remains a medium-sized investment, not a large one.
My core thesis is simple:
In industrial technologies, manufacturing efficiency often matters more than theoretical breakthroughs.
Honda’s C-1 facility suggests they are focusing exactly on that.
And if solid-state batteries succeed, the fastest route might not be the straight line into cars but first in motorcycles for which density and safety are paramount, to scale and test faster and then go into cars.
Interestingly the route taken by Honda might have more to do with manufacturing of turbofan engines (which share some key manufacturing constraints like metal powders technologies, densification, a hyper-focus on crack prevention and material integrity — capabilities that are harder to replicate brute manuf scale in LFP process). Honda also manufactures turbofan engines where this expertise comes from, something no other major car manufacturer does.