Honda pulls back on EV strategy for now and will push hybrid sales

Honda announced on Tuesday that electric vehicle sales in the U.S. were slowing down, leading the Japanese automaker to revise its target of having EVs account for 30% of global vehicle sales by 2030. The company is now reducing its initial investment plan of 10 trillion yen ($69 billion) for electrification strategy through 2031 by 3 trillion yen ($21 billion) to 7 trillion yen ($48 billion.

Honda’s CEO, Toshihiro Mibe, described these decisions as a change in direction, emphasizing that the shift towards electrification remains a long-term goal. Although not directly mentioning U.S. President Donald Trump, Honda acknowledged that policies like tariffs and a lack of enthusiasm for electric vehicles have forced Japanese automakers like them to adjust.

Honda highlighted that the automotive industry’s landscape is evolving rapidly, with uncertainties arising from factors such as changes in environmental regulations impacting the growth of the EV market. While Mibe did not provide a specific timeline for the new electrification strategy, Honda intends to focus more on producing hybrids, alongside its existing models like the Civic and Accord.

Under the revised plan, Honda’s auto plant in Marysville, Ohio will be reconfigured to manufacture both EVs and hybrids. Mibe underscored Honda’s strength in the motorcycle business, particularly in India, where sales are increasing, and the company’s global market share is on the rise.

In terms of safety, Honda is exploring various digital technologies, including assisted driving systems aimed at reducing traffic-related fatalities to zero, a key objective for the company. Talks of a potential merger between Honda, Nissan, and Mitsubishi Motors have stalled, but discussions continue regarding collaboration on technology development.

While Nissan faces challenges with losses and restructuring, Honda reported a 24.5% decline in profit for the fiscal year ending in March, primarily impacted by external factors such as tariffs and declining sales in China. Despite these challenges, analysts like Aaron Ho from CFRA Research remain optimistic about Honda’s profitability outlook.