Honda Cuts EV Sales, Investment Targets As It Shifts Focus

(RTTNews) - Honda Motor Co., Ltd. announced Tuesday that it is realigning automobile business strategy, with a cut in planned electric vehicle or EV sales ratio, and investment for automobile electrification due to the recent market slowdown. Meanwhile, Honda expects a minimal increase in investment related to Hybrid Electric Vehicle or HEV business.

The changes were evolved as the Japanese auto major is shifting its focus from EVs to hybrid electric vehicles or HEVs, and the development and expanded application of its original next-generation advanced driver assistance system or ADAS.

The proposed investment reduction is based on its decision to postpone the project to establish a comprehensive EV value chain in Canada and change the timing to construct dedicated EV production plants.

Toshihiro Mibe, Honda's Director, President and Global CEO, in a press briefing revealed the company initiatives centering on automobile electrification.

On a financial point of view, towards 2030, Honda plans to improve profitability with continuous expansion of motorcycle business, cost reduction effects in automobile business associated with the adoption of the next-generation e:HEV system and platforms, as well as an increase in unit sales of HEV models.

Honda said it has decided to reduce the investment amount by 3 trillion yen, to a total of 7 trillion yen in resources to pursue its electrification strategy, over the period through fiscal year 2031. The previous plan was to invest 10 trillion yen.

Regarding the changes in capital allocation over the five-year period, starting from the 2027 fiscal year, Honda said it expects to generate more than 12 trillion yen in cash, in light of the reduction in the resource investment amount.

Regarding shareholder returns, Honda will maintain the previously announced target and strive for more than 1.6 trillion yen.

Honda said it will realign its automobile electrification strategy, in the two directions of enhancing the competitiveness of EV and HEV models with the core focus on application of intelligent technologies; and strengthening its business foundation through the reassessment of the powertrain portfolio.

The Honda global EV sales ratio in 2030 is now expected to fall below the previously announced target of 30%, due to the revision of the product launch plan considering the recent market slowdown.

On the other hand, current market demand for HEV models is high, and the company plans to position its HEVs, mostly next-generation HEV models to be introduced to market in 2027 onward, as the powertrain that will play a key role during the transition period toward the popularization of EVs and further enhance its HEV lineup.

With the steady execution of the realignment, by 2030, Honda expects 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.

In the area of applying intelligent technologies, Honda plans to strengthen its business foundation by reassessing its powertrain portfolio, such as EVs and HEVs.

Further, the company said it is working to develop next-generation ADAS that enables safe and comfortable driving all the way to the destination, including in urban environments. Honda will apply this new, next-generation ADAS to a broad range of key EV and HEV models Honda will launch in North America and Japan around 2027.

Further, as a symbol of the transformation of Honda automobile business, the new 'H mark' will be used for EV models as well as for major HEV models, starting with the next-generation models to be introduced to market in 2027 and beyond.

In motorcycle business, Industry-wide sales are expected to grow from the current level of 50 million units to the level of 60 million units by around 2030.