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How Honda Will Take On Tesla: By Being Honda

An illustration showing a partial rear view of a low-slung sports car with classic coupe proportions.

In a surprise, Honda (NYSE: HMC) said that it will unveil an all-electric sports car at the Tokyo Motor Show on Oct. 25 -- and it released the "teaser" illustration you see below.

This will be the second all-electric car built on what Honda has described as an all-new architecture designed specifically for electric vehicles, following the Civic-like Honda Urban EV Concept it showed earlier this month.

It's another sign that Honda, a company long respected for its innovation and independence, has been quietly preparing a major move into electric vehicles -- one driven by a lesson it might have learned from Tesla (NASDAQ: TSLA) .

An illustration showing a partial rear view of a low-slung sports car with classic coupe proportions.

Honda released this "teaser" illustration of a new electric sports car, the Honda Sports EV Concept, that it plans to reveal at the Tokyo Motor Show in late October. Image source: Honda Motor Co., Ltd.

What we know about Honda's electric sports car

Honda hasn't said much about the vehicle yet. Officially, right now, all we have is the "teaser" illustration and this short paragraph from a Honda press release:

The Honda Sports EV Concept aims to realize a feel of unity with the car, combining EV performance and AI with a compact form. While sharing the platform with Honda Urban EV Concept, its unforgettable silhouette, friendly front fascia that naturally blends into any lifestyle, and supple surfaces make it a next-generation sports car that brings joy and emotional attachment in ownership.

But we do know a few more things about the Sports EV Concept:

  • It's a show car, meaning that officially , as of right now, Honda hasn't announced any plans to build it.
  • It's based on the same architecture as the Urban EV Concept, and CEO Takahiro Hachigo said a production version of that car will arrive in 2019.
  • At Honda's annual meeting in June, Hachigo emphasized that the company had stepped up its electric-vehicle development efforts with a new team dedicated to developing electric vehicles for production.

Long story short: It seems likely that Honda is planning to put this one into production, too.

What it says about Honda's electric-car program

Honda's electric-vehicle efforts to date have largely disappointed its longtime fans. While the company was among the first to offer hybrid drivetrains, it seemed to have fallen behind more farsighted rivals on fully electric vehicles. More broadly, beyond electric vehicles, Honda has seemed in recent years to have lost the product "mojo" that attracted legions of devoted customers in decades past.

Hachigo, in a blue suit, stands next to the Urban EV Concept, a white hatchback with styling reminiscent of 1970s Honda Civics, on Honda's stand at the 2017 International Motor Show in Frankfurt, Germany.

Honda CEO Takahiro Hachigo posed with the Urban EV Concept in Frankfurt earlier this month. Hachigo said that a production version of that car will arrive in 2019. Image source: Honda Motor Co., Ltd.

Honda may have found its mojo. The styling of the Urban EV Concept is a cheerful riff on Honda's fondly remembered 1970s-era Civic hatchbacks. It's pitch-perfect, and the concept appears to have won many fans. This sports car, which could be an affordable speedster aimed at younger car enthusiasts -- an electric rival to affordable sports cars and "hot hatch" models like Subaru 's BRZ, Mazda 's MX-5 Miata, and Ford Motor Company 's (NYSE: F) Focus ST -- has the potential to win more.

That's a bigger deal than you might think. The lesson that Tesla has taught the auto industry is that consumers will buy electric cars if they're compelling products in their own right. Honda appears to have taken that lesson to heart. But rather than aping Tesla's ideas, as some automakers seem to be doing, Honda is looking to its iconic products of the past to produce great Hondas that happen to be electric.

If Honda is finding its product mojo, look out

There's an old auto-industry adage: Compelling products are the most important factor in an automaker's success. Compelling products can be sold at good profit margins, and they draw buyers from beyond the company's core loyalists.

Honda seemed to have forgotten that lesson for a while. But when Hachigo took over as CEO in 2015 , he promised to create a "new Honda." Specifically, he said that he would refocus the company on creating compelling products, looking to recapture that Honda mojo.

The Urban EV Concept was a big sign that Honda had remembered what made it great: products that people loved. The Sports EV Concept could have the same potential, and we could soon start to see this same thinking show up in Honda's mainstream models as well. Investors, take note.

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John Rosevear owns shares of Ford. The Motley Fool owns shares of and recommends Ford and Tesla. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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