Honda distances itself from EVs and admits: 'we have not been able to compete'

Honda has profoundly changed direction after recording its first annual loss since its stock market listing in 1957, a unprecedented setback resulting from an impact of over 1.45 trillion yen, equivalent to 9.2 billion dollars, related to EV activities. The Japanese manufacturer acknowledged that it has failed to offer competitive electric vehicles in terms of value for money compared to the new players in the sector.

CEO Toshihiro Mibe confirmed a complete review of the industrial roadmap: Honda will no longer phase out internal combustion engine models by 2040. The goal remains carbon neutrality by 2050, but through a much broader strategy that will include hybrids, electric vehicles, carbon-neutral fuels, and emission offset technologies.

Starting next year, Honda will introduce a new generation of hybrid models based on a completely new platform and a redesigned hybrid system. According to the company, this architecture will allow for an improvement in fuel consumption of over 10%, along with a reduction in production costs of more than 30% compared to current Honda hybrid systems. By the end of the decade, the brand will launch 15 new hybrid models globally. In North America, the central market for the group's accounts, Honda will focus mainly on D-segment and larger, more profitable vehicles. Among the first previews are the Honda Hybrid Sedan Prototype and the Acura Hybrid SUV Prototype, expected to hit the market within the next two years.

At the same time, Honda has canceled three major electric programs in the United States, including the 0 Series SUV range, the Saloon sedan, and the Acura RSX at the EV hub in Ohio. The production facilities will be repurposed to increase the output of hybrid and gasoline models.

The joint venture with LG Energy Solution will also undergo modifications: some of the lines dedicated to EV batteries will be repurposed to produce batteries for hybrid vehicles. In addition, Honda has decided to indefinitely suspend its 15 billion dollar plan for the EV plant in Ontario.

The total cost of the retreat from the previous electric plan is estimated at 2.5 trillion yen, about 15.7 billion dollars, with most of the financial impact expected in the next fiscal year. Honda expects to absorb a large part of the losses related to electric vehicles by March 2029.

Like many other manufacturers, not just Japanese ones, Honda has thus rebalanced resources and taken its foot off the accelerator for total electrification. Clearly, this does not mean that 100% electric drivetrains will be completely abandoned, but that the focus will shift more towards complementary electrification rather than complete electrification.