Car-maker Honda is planning to team up with Mitsubishi Corporation to begin an electricity supply and storage business using the batteries of EVs.

The two companies announced today that they had signed a memorandum of understanding to prepare the formation of a joint venture to exploit the possibilities offered by the growth in the EV market and contribute to Japan’s decarbonisation efforts.

Toshihiro Mibe, the chief executive of Honda, said his company was preparing for a new era marked by the “full-fledged popularisation of EVs”. He said: “Honda will not only sell EVs but take a proactive approach to energy management, whereby EV batteries will be utilised as an energy source.”

Among the possibilities under discussion is the use of EV batteries to provide a storage buffer to smooth fluctuations in renewable energy supply.

The plan has been made more attractive by changes in the Japanese energy regulations, which are due to come into force in 2026. These will allow small power storage operators, including the owners of EVs, to sell electricity to the grid. This is expected to make the purchase of an EV more attractive to consumers.

The companies are stressing the plan’s sustainable credentials.

The performance of EV batteries varies inversely with the number of charging cycles. Eventually, they have to be removed – but are still able to work in retirement as energy stores. When this is no longer possible, the joint venture will recycle them to extract their rare earth minerals.

Katsuya Nakanishi, chief executive of Mitsubishi Corporation, said the joint venture was a response to future developments in technology and society, in which mobility, energy, services and data converged in the EV.

He said Mitsubishi was aiming to develop business models that balanced “electrification and decarbonisation to create cross-industry services and otherwise reinvent ourselves in keeping with the times”.