Honda to Scale Back on Electric Vehicles

May 21, 2025 - 00:15 Updated: May 20, 2025 - 22:02

Honda to Scale Back on Electric Vehicles

Amid slowing EV demand, Japan’s second-biggest automaker said it will be focusing on hybrids.

Japanese carmaker Honda Motor Co. said on May 20 that it will scale back investment in electric vehicles as demand slows and will focus instead on meeting a growing demand for hybrids.

Honda said in a statement that “due to the recent market slowdown,” it will scrap its previous goal for electric vehicles (EVs) to be 30 percent of its global vehicle sales by 2030.

“The environment surrounding the automobile industry is changing day by day. 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,” Honda said.

The company said that it still believed that electric vehicles are “the optimal solution to achieve carbon neutrality of passenger vehicles” but that it will “steadily carry out initiatives being undertaken to prepare for the future EV shift at the appropriate timing.”

On Tuesday, Honda CEO Toshihiro Mibe told a press conference, “It’s really hard to read the market, but at the moment we see EVs accounting for about a fifth by [2030].”

Mibe announced on May 13 that the company would be forced to postpone some large-scale investments in Canada for two years after the EV market had “slowed more than initially expected.”

Talks that began late last year to bring together the operations of Honda and Japanese rival Nissan, as well as smaller automaker Mitsubishi, in a merger, ended earlier this year.

Under the Chinese Communist Party’s national industrial plan, known as “Made in China 2025,” the regime aims to dominate global high-tech manufacturing. EV battery technology is one such strategic industry.

China currently has a 15-year development plan for the new energy vehicle industry running through 2035, following an initial eight-year plan implemented from 2012 to 2020. Deep integration into the global supply chain is outlined in the plan’s “fundamental principles” section.

Earlier this month, the European Union agreed to softer EU CO2 emissions targets for cars and vans that will allow automakers more time to comply with the regulations.

EU law stipulates that from 2035, all new cars that come on the market cannot emit any carbon dioxide (CO2), making it illegal to sell new fossil fuel-powered internal combustion engine (ICE) vehicles in the bloc.

European carmakers had warned that the emissions targets lead to huge fines, threatening investment, jobs, and competitiveness.

Starting on Jan. 1, EU targets required a 15 percent reduction in CO2 emissions for both cars and vans from 2021 levels.

The European Commission proposed allowing automakers to meet the targets based on their average emissions over the 2025–2027 period, rather than just for this year, a change it has now adopted.

Italian Energy Minister Gilberto Pichetto Fratin criticized the policy earlier last year at the TEHA business forum in Cernobbio, Italy, saying that “the 2035 ban on new combustion engine cars is absurd and needs to be revised.”

Volkswagen said last year that it is considering factory closures in Germany for the first time amid growing pressure from cheaper Chinese electric vehicles.

The automaker is targeting $11 billion in savings by 2026 to navigate the transition to EVs.

Some politicians have called for the ICE ban to be overturned completely.

In an April 16 interview with the Financial Times, Manfred Weber, leader of the European People’s Party—the largest political group in the European Parliament—said that people should be allowed to buy petrol and diesel cars as long as the carbon emissions are offset.

“I use a classical combustion engine, with classical fuel, but then pay for storing CO2 in the soil, probably that is a business model for the future,” he said.

Terri Wu and Reuters contributed to this report.