Mazda Won't Abandon The Internal Combustion Engine As It Invests $11 Billion In EV Production

Nov. 23, 2022 10:54 AM ET by Jay Traugott Industry News / 2 Comments

The Japanese automaker fell behind with EVs and is now playing catch-up.

Mazda likes to take pride that it does rely on a parent company or larger automaker for its survival. The downside is that it can be very easy to fall behind the competition in several areas, such as electrification. That's all about to change. However, combustion engines remain a part of its future.

Following the reveal of the gorgeous new Vision Study Model concept, Mazda will invest nearly $11 billion ($10.6 billion, to be precise) into electrification through 2030. This investment will include partnerships with other companies for vital components such as batteries, motors, and computer chips.

Essentially, Mazda needs to play catch up in a rapidly changing industry. It's been very slow to launch EVs. The only example it currently has on sale is the MX-30, a crossover with an estimated EPA range of just 100 miles on a charge. That's not good enough, given the new competition, and Mazda knows it.

Automotive News spoke to Mazda CEO Akira Marumoto about these plans and why they are vital for the firm's future.

Mazda's plan will likely involve EV production in the US as soon as 2026 or 2027. The new plant in Alabama, home of the new CX-50, is the most likely candidate for this. Mazda's plan will see it team with Tokyo-based battery maker Envision AESC Group. Mazda chose Rohm Co, a Japanese electronics firm, for those vital semiconductor chips. In 2030, Mazda estimates that EV sales will comprise 25 to 40 percent of its global sales.

Previously, the automaker had that figure pegged at just 25 percent of sales at most. Manufacturing these new EVs in the US makes sense for several reasons, among them the tax credit benefits of the Inflation Reduction Act (IRA).

"North America is the most important market for us," said Marumoto. "There are still some unclear things about the IRA, and we need to have a better understanding of it. Given the importance of the market, we hope to manufacture EVs in North America at some point. But at the moment, we are thinking of the possibility in the second half of the phase 2."

Mazda originally wanted to announce this plan last spring but was forced to delay things due to market uncertainty due to the Ukraine war and ongoing global supply chain issues.

Marumoto declined to provide a specific 2030 EV sales target figure, but he clarified the carmaker is not abandoning internal combustion. "We are not dismissing internal combustion vehicles," he said. "We will have to respond flexibly."