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As electric cars slowly take the spotlight when it comes to consumer’s vehicle preference, new measures to upgrade parts and cut down costs are being employed by manufacturers. To join the movement in pushing for zero-emissions vehicles, Honda Motor Co., Ltd. (NYSE:HMC) and Hitachi Ltd. (TYO:6501) has come up with a collaboration that intend to reduce the cost of mass producing vehicle motors.

To move further towards this goal, the two industry giants penned an agreement to create a synergy of technologies between manufacturer and supplier so as to “strengthen their competitive advantage and business foundation for the motors at the core of an electric vehicle.”

Due to the growing electric car market that is seen to expand further in the next decade, global car makers are working together left and right with co-manufacturers and parts suppliers in the pursuit to gain advancements in the electric car industry and in the key parts that will enable such advancements.

Stated in the signed Memorandum of Understanding, a 51 percent stake in the joint venture company will be owned by Hitachi while the remaining shares will be under the possession of Honda. Around $44.5 million will be poured in by both companies.

Formal discussions as to the new company’s establishment will now be conducted by Honda and Hitachi. By the end of March of the current fiscal year, a formal agreement would then be anticipated to be signed by both parties and the new joint venture company will be established officially in July of the current year.

Recent session saw Honda Motor Co., Ltd. rise up 1.12 percent at $31.73 with an intraday high of $31.75 and a trading day low of $31.52, at the New York Stock Exchange where it opened at $31.69 as seen in the chart below.

Also, the auto maker’s 14-day Relative Strength Index currently nears the overbought level at 67.20. If previous RSI patterns are to be consulted, the stock will either continue to break out of the overbought level before retreating downward or it may begin its retreat even without testing the overbought resistance level.

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Honda Motor Co., Ltd.’s current market capitalization is $57.15 billion with an average trading volume of 721,955. The stock is currently 0.06 percent away from its 52-week high of $31.75 and is 24.27 percent ahead of its 52-week low at $24.03. Its Price to Earnings ratio is situated at 14.02, with earnings per share of 2.26.

On December 1, 2016, Macquarie downgraded the stock to Neutral without setting a price target. Bank of America also downgraded the stock on May 31, 2016 to Neutral, also without a specific price target. UBS has rated the stock a Sell on May 27, 2016 without specifying a specific price target. Also downgrading the stock is CLSA, giving an Underperform rating with no specific price target.

On the other hand, Jefferies maintained its Buy rating on the stock on May 13, 2016 and had set a price target of $34.60.

As of the moment of writing, analysts’ consensus price target for Honda Motor Co., Ltd. is at $34.29. Some analysts have higher projections for the stock with a $35.91 price per share. Others have lower estimates of $32.66 share price.

Moreover, Zach Investment Research gave a stock rating with the value of 2. The scale the investment research firm uses runs from 1 to 5 where 5 indicates Sell and 1 indicates Strong Buy.

This move by one of the automobile frontrunners to tap the electric vehicle manufacturing may prove to be good for the stock in the long run especially now that the zero-emissions vehicle industry is getting a second look by the market.

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