Honda scales back EV goals, shifts focus to hybrids amid global EV slowdown

Japanese carmaker Honda is making a sweeping change to its global strategy for electric vehicles (EVs), claiming a decline in EV market demand in the U.S., and rising market uncertainties. The company will then cut back on investments in electrification and put its focus on hybrid vehicles in the immediate future followed by a desire to go electric long-term.

EV targets pulled back as market cools

Originally aiming for EVs to comprise 30 per cent of its global vehicle sales by 2030, Honda has now abandoned that target. The company also trimmed its planned investment in electrification from 10 trillion yen (USD 69 billion) to 7 trillion yen (USD 48 billion) by the fiscal year ending 2031.

CEO Toshihiro Mibe described the move as a "course correction" rather than a change in long-term vision. He emphasized that Honda is still committed to electrification but will delay the transition in response to current challenges.

“The environment surrounding the automobile industry is changing day by day," Honda noted in an official statement. “There is increasing uncertainty, especially due to a slowdown in the EV market and evolving environmental regulations."

Focus shifts to hybrids and flexible production

Under the new strategy, Honda will become more aggressive in the hybrid segment, especially in regions where EV sales are slower to take off. The Marysville Ohio plant and other such facilities will be modified to make both EVs and hybrids to enable the company to be more flexible in production according to how the consumer base shifts.

Honda's hybrid pivot also arrives during political headwinds in the U.S., such as potential tariff shifts and diminished policy favor for EVs. Though Mibe did not specifically name former U.S. President Donald Trump, the automaker's realignment seems partly driven by this shifting regulatory environment.

Motorcycles, digital safety, and industry collaborations

While EVs are experiencing headwinds, Honda is meanwhile experiencing solid momentum in its motorcycle business—most notably, in India, where increasing demand and market share are solidifying its standing worldwide.

On the technology side, Honda is spending on sophisticated driver-assist systems and digital safety technologies with the ultimate aim of reaching a zero-traffic-fatality target.

Meanwhile, Honda assured that negotiations on a merger with Nissan and Mitsubishi have broken down, although discussions on technology cooperation continue. No timeline has been provided for potential joint initiatives.

Despite a 24.5 per cent drop in annual profits, largely due to tariffs and declining sales in China, Honda remains optimistic about its diversified global approach and the flexibility of its revised strategy.

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