By Maki Shiraki and Kantaro Komiya

TOCHIGI (Reuters) - Honda Motor ( HMC ) aims to double the driving range of its electric cars by the late 2020s when they start to adopt all-solid-state batteries, a new type of power source under development, the head of its research unit said on Wednesday.

All-solid-state batteries, replacing liquid-state lithium-ion batteries, will produce twice the driving range by the end of this decade and over 2.5 times more by the 2040s, said Keiji Otsu, president of Honda R&D.

Automakers and battery suppliers worldwide have unveiled plans to develop solid-state batteries, touted as a key technology to make longer-lasting, safer and cheaper electric vehicles amid slowing EV growth.

"It's a game-changer of the EV era," Otsu told reporters at Honda's ( HMC ) pilot all-solid-state battery production line in Tochigi north of Tokyo. Honda ( HMC ) is investing 43 billion yen ($277 million) in the pilot line, nearly half of which is funded with Japanese government subsidies.

Honda ( HMC ) will start operating the pilot line in January, with goals also to reduce battery size by 50%, weight by 35% and cost by 25% from current levels in the next half decade, Otsu said.

Honda ( HMC ) plans to increase its annual EV production to over 2 million units by 2030. It also targets a global sales ratio of 40% for EVs and fuel cell vehicles in 2030, and 100% in 2040.

Nissan Motor, Honda's ( HMC ) strategic partner, is also developing all-solid-state batteries, aiming to start the operation of its pilot line in March.

"There may be areas where we can work together," Otsu said, suggesting the possibility of joint materials procurement.

Honda ( HMC ) has "no reason to refuse" the external sale of its solid-state batteries if that is mutually beneficial to it and partners, Otsu added.

Toyota Motor, the world's biggest automaker by sales, is looking to commercialise all-solid-state batteries in 2027-2028 in partnership with oil refiner Idemitsu Kosan.

($1 = 155.2800 yen)