Honda announced a significant shift in its electric vehicle (EV) strategy on Tuesday, citing a slowdown in EV demand in the U.S. market. The Japanese automaker is scrapping its previous goal for EVs to make up 30% of global vehicle sales by 2030.
As part of this change, Honda is also reducing its planned investment in electrification. Originally set to invest 10 trillion yen (around $69 billion) through the fiscal year ending in 2031, the company is now cutting that figure by 3 trillion yen, bringing the total to 7 trillion yen ($48 billion).
Honda CEO Toshihiro Mibe described the change as a strategic course correction rather than a retreat. He emphasized that the long-term shift to electrification remains a priority, though the timeline is now more flexible.
While Mibe didn’t directly reference former U.S. President Donald Trump, current uncertainties around tariffs and a lack of political support for EVs have influenced Honda’s strategic pivot. The company acknowledged that the EV market’s expansion is slowing, influenced by shifting environmental policies and broader market conditions.
Mibe said that in the meantime, Honda will focus more aggressively on hybrid vehicles. For example, the company’s Marysville, Ohio, plant will be reconfigured to produce both hybrids and EVs under the revised plan.
He also highlighted Honda’s motorcycle division as a bright spot, particularly in markets like India, where sales and global market share continue to grow. Additionally, Honda is investing in digital technologies to enhance vehicle safety, aiming to eliminate traffic-related fatalities, a long-standing goal for the company.
Meanwhile, discussions to merge operations with fellow Japanese automakers Nissan and Mitsubishi broke down earlier this year. Despite that, Mibe said talks are continuing around potential collaboration in technology development, though he didn’t provide a timeline for any potential agreement.
Nissan is currently struggling with financial losses, workforce reductions, and plant closures. Its new CEO, Ivan Espinosa, has vowed to revitalize the company through faster decision-making processes.
Honda reported a 24.5% drop in profit for the fiscal year ending in March, driven largely by external pressures like tariffs and declining sales in China. However, analysts remain optimistic about Honda’s financial outlook, citing effective cost-cutting measures as a key strength moving forward.
