Honda announced on Tuesday (May 20) a shift in its electrification investment strategy, focusing more on hybrid vehicles rather than electric cars in response to slower-than-expected growth in electric vehicle sales. However, the automaker emphasized that its long-term goal of transitioning to electrification remains unchanged, with only a delay in the timeline.
Honda’s CEO, Toshihiro Mibe, stated at a press conference, “Considering market conditions, policy trends, and environmental regulations, our original electrification strategy cannot be implemented as planned.”
The company forecasts a net profit of 250 billion yen (approximately 17.3 billion USD) for the fiscal year ending in March 2026, a 70% decrease from the previous year.
Originally planning to invest 10 trillion yen (about 690 billion USD) in electrification strategies by the fiscal year ending in 2031, Honda has now reduced the investment amount by 30% to 7 trillion yen (485 billion USD).
Honda also announced the postponement of its investment plan in Canada, where the company initially intended to invest 15 billion Canadian dollars (approximately 10.8 billion USD) to establish a complete electric vehicle supply chain.
In a statement, Honda expressed, “The automotive industry’s landscape is rapidly evolving, particularly with increasing environmental regulations and a slowdown in the expansion of the electric vehicle market, leading to greater uncertainty in the business environment.”
Mibe did not provide a new timeline for the electrification strategy, but mentioned that the company is currently focusing on meeting the growing demand for hybrid vehicles, planning to introduce 13 hybrid models over a four-year period starting in 2027.
He stated, “With the slowing pace of the electric vehicle transition… we anticipate that demand for hybrid vehicles will continue to grow until 2030 as they can reduce carbon dioxide emissions without the need for charging infrastructure.”
The company aims to sell over 2.2 million hybrid vehicles globally by the fiscal year ending in 2031, more than double the projected sales volume by the fiscal year ending in 2026.
(This article referenced related reports from the Associated Press)