Honda looking to raise $2.75 billion through green bonds for EV push

Honda Motor is looking to push its electrification process by raising $2.75 billion through US dollar-denominated green bonds, Carscoops reported. The automaker is looking to issue $1 billion worth of 3-year notes, $1 billion worth of 5-year notes, and $750 million worth of 10-year notes in this move. The green bonds are expected to yield 1.12 percentage points above Treasuries for the automaker.

A bond prospectus published by the automaker shows that it will allocate an amount equal to the net proceeds of the green bonds to some green initiatives such as production of electric vehicles, solar and wind technologies, and into investments in the recycling of used vehicle parts.

Honda is not the first carmaker to sell green bonds to raise funds. A few months earlier, Ford sold $2.5 billion of green bonds to help raise additional funds for its transition to electric vehicles. As per Bloomberg, $513 billion worth of green bonds were sold last year and may reach as high as $1 trillion this year and more than $5 trillion by 2025.

Honda is working on a full-fledged transition to electric vehicles as the company plans to only sell all-electric and fuel-cell vehicles by 2040. The car manufacturers also expects battery-electric and fuel-cell vehicles to account for 40 per cent of its total North American sales by 2030 and 80 per cent by 2035. The company's future electric models will be based on its e:Architecture platform.

Honda is also working on two electric SUVs that will use General Motor's Ultium batteries. One of these SUVs will be called the Honda Prologue while the other will be an Acura.

The carmaker also recently partnered tech giant Sony to develop and sell electric vehicles. As part of the joint agreement, Honda will take care of manufacturing the first electric vehicle model to be developed by the two companies.