Honda commits to going out of business by pulling back on EVs as sales rise

Honda said it will reduce its planned EV investments by $21 billion, claiming that it’s doing so due to a slowdown in EV sales which isn’t actually happening.

Instead, it will focus on hybrids, which get 100% of their energy from fossil fuels, and which cause climate change and poison the air you breathe.

Honda’s announcement came earlier today in Japan, stating that it will scrap its plan for EVs to be 30% of its global vehicle sales by 2030, citing a “slowdown in the expansion of the EV market due to several factors, including changes in environmental regulations.” It will reduce planned investment from 10 trillion yen ($69 billion) to 7 trillion ($48 billion).

However, as we have pointed out many times here at Electrek, EV sales have not fallen, cooled, slowed or slumped. In fact, last year, in 2024, EV sales grew more than they did in 2023. Meanwhile, global gas car sales hit their peak in 2017, and have been trending down since.

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Honda didn’t precisely state its new timeline, but said that EVs would fall below the previously-announced target of 30% by 2030.

It instead said it would focus on hybrids, which get 100% of their energy from fossil fuels, and thus pollute the air you breathe and cause climate change with every stroke of their outdated, inefficient engines.

(*Note: Honda’s chart says “HEV,” not “PHEV” – it’s possible they’re including plug-ins here, and thus some of these vehicles will get some of their energy from something other than fossil fuels, but HEV typically means conventional hybrids which get all of their energy from gas)

Honda said that these gas-guzzling hybrids will “be introduced to market in 2027 onward,” which means they will continue driving on roads and polluting the Earth for decades, including after Honda’s 2050 carbon-neutrality target.

Honda’s previous plan for 30% by 2030 was already quite low compared to other global automakers, even after many of these companies have walked back their EV plans. Most of these other companies also cited the nonexistent slowdown in EV sales.

Honda said that its future hybrid models will “play a key role during the transition period toward the popularization of EVs.” In some of the world’s more profitable countries for auto sales, EVs are already at or nearing majority market share.

Electrek’s Take

It’s estimated that this year – not 2030 – 25% of cars sold globally will be EVs. So, any company that sells less than that is lagging behind the curve, losing ground to companies that are ready for the transition that is already happening. When you are behind, the way to catch up is to speed up, not to slow down.

This 25% EV sales projection shouldn’t be a surprise, because EV sales have been rising globally for many years now, and haven’t stopped doing so, as we keep having to point out. In fact, the opposite is happening.

Honda also mentioned changes in environmental regulations, stating that these regulations were “the premise for the widespread adoption of EVs.” In the same statement, it mentioned its “ambitious goal to ‘achieve carbon neutrality for all products and corporate activities’” – so I guess the mention of regulations as the actual premise means all that carbon neutrality stuff was just greenwashing, after all.

But as for regulations, currently, US regulations target ~50% market share for EVs by 2030, and California targets 68%. 30% is a far cry from either of these, so one would think that Honda should increase that number, not lower it.

Further, those regulations are likely not changing nearly enough to make up for Honda’s change in strategy here. Despite the protests of a former reality TV host and convicted felon (who is Constitutionally barred from holding office in the US, by the way), it is unlikely that already-filed regulations, which cover the period from 2027-2032, will be changed.

But the US isn’t the world – maybe Honda was talking about other major markets?

Well, Europe isn’t changing its regulations, either – the bloc recently said it will give automakers “breathing room”, allowing them to use the average of their emissions from 2025-2027 to comply with new emissions regulations, but this will still require a steeper ramp-up by the end of that period if automakers are not in compliance today. In other words, those regulations have not been softened on a 2030 timeline, only on a 2025 one.

And in China, well, new regulations went into effect a couple years ago, but they almost didn’t need to, because ICE cars are virtually unsellable there these days. EV adoption is rising incredibly rapidly in China, driven by local brands which Chinese customers trust more, and which have more nifty features than the models global automakers are offering there.

In fact, Honda’s profit is slipping precisely because of the rapid advancement of the Chinese auto market. AP reports that Honda’s Q1 profits slipped by 24.5%, driven largely by sliding sales in China in the face of local EV competition. How’s that for “slowing demand.”

Honda does sell one EV in the US market, the Prologue, which is selling like gangbusters. It’s the fifth-best-selling EV in the country, and was a large part of what drove US EV sales into growth in April. It’s also Honda’s fastest-growing model – though, to be fair, that does count from a very low baseline, as the model was only trickling out onto the market a year ago.

So, there seems to be no real justification for Honda’s change in strategy here. Unless they seem to enjoy that China is now beating Japan in terms of auto exports, and are excited to see Japan lose 14% of GDP and millions of jobs by stalling on EVs.

I guess if you want to go out of business and bring your country and the planet down with you, this is the way to do it.

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