The Japanese giant declined to disclose the amount of new investment but the Nihon Keizai Shimbun said the auto and motorcycle maker would spend some 86.5 million dollars on its factory in Kumamoto prefecture in southern Japan.

Honda, which was the first major automaker to enter the market, said it will use thin film solar cell made of a compound of copper, indium, gallium and selenium -- instead of the usual silicon.

The production system will require only half the energy to produce a conventional solar cell and lower carbon-dioxide emissions by 50 percent, Honda said.

Honda said the next-generation solar panels -- which had already been developed but had earlier proved difficult to mass-produce -- would ultimately cut production costs.

"Honda will contribute to the effort to prevent global warming through production and sales of a clean energy source which does not use fossil fuels," it said in a statement.

The new production system will initially have an annual capacity to produce about 27.5 megawatts worth of solar cells, enough for 8,000 households a year.

Honda and other Japanese automakers have made sizable profits in recent years to invest in eco-friendly technology such as hybrid cars, which have proven a particular hit in the United States.

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Photovoltaic News

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