Japan's Honda slashes global EV investment plan and sales target on weak demand, trade turmoil

CEO Toshihiro Mibe on May 20 announced a major drop in proposed investment from the 10 trillion yen to announced last year to 7 trillion yen, or $48.3 billion.

Japan's Honda Motor has 'realigned' its electric vehicle strategy, significantly lowering proposed investment and sales target owing to a slowdown in global EV expansion due to uncertain business environment, weak demand, and regulatory hurdles overseas markets.

CEO Toshihiro Mibe on May 20 announced a major drop in proposed investment from the 10 trillion yen to announced last year to 7 trillion yen, or $48.3 billion. Honda said its global EV sales ratio projected for 2030 is now expected to fall below the previously announced target of 30 percent.

“EV investment hasn’t been abandoned, just pushed back,” Mibe clarified during the business update.

"Uncertainty in the business environment is increasing, due particularly to the slowdown in the expansion of EV the market due to several factors, including changes in environmental regulations, which had been the premise for the widespread adoption of EVs, as well as changes in trade policies of various countries," Honda Motor said in a statement.

As part of the realignment in its EV strategy, Honda Motor said it will focus on two aspects:

-Enhance competitiveness of EV and HEV models with core focus on intelligent technologies
-Reassessment of the powertrain portfolio

Instead, Honda said it will focus on its next-generation Hybrid EVs to be introduced into market from 2027 onward. The hybrid powertrain will be key in this transition period toward the popularization of EVs, added Honda Motor.

"With the steady execution of this realignment, by 2030, Honda will strive to increase total automobile sale volume to above the current level of 3.6 million units, with a HEV sales target of 2.2 million units at the core," the automotive major added.

Honda added that it is reassessing its EV strategy and roadmap, along with its EV product lineup. "Due to the recent market slowdown, the Honda EV sales ratio in 2030 is now expected to fall below the previously announced target of 30%," said the car company.

America is the biggest market for Japanese carmakers, relying on factories in Mexico or Canada to make cars and ship across the border. US President Trump’s 25% tariffs on imported cars have made this route an expensive option.