Japanese automaker Honda Motor has announced that it will be scaling back its investment in electric vehicles (EVs) and instead focus on hybrid cars due to slower than expected demand for EVs.
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The company has dropped its target for EV sales to account for 30% of its total sales by the 2030 financial year and has reduced its planned investment in electrification and software by 30% to 7 trillion yen ($48.4 billion). This shift in strategy comes as governments around the world are adjusting their emission rules and EV sales targets, with hybrid vehicles becoming more popular.
Honda's new approach involves launching 13 next-generation hybrid models globally over the next four years and developing a hybrid system for its large-size vehicles. The company expects to sell 2.2 million to 2.3 million hybrid vehicles by 2030, a significant increase from the 868,000 it sold last year. Despite the shift in focus, Honda still aims to have all its new car sales be battery-powered or fuel-cell vehicles by 2040.
The decision follows similar moves by other automakers, such as Nissan, which abandoned its plan to build a $1.1 billion battery factory in Japan due to sluggish EV demand, and Jaguar Land Rover, which has put on hold its plans to build electric vehicles at Tata Motor's new $1 billion factory in India. This strategic pivot highlights the evolving landscape of the automotive industry, where the balance between EVs and hybrids continues to be influenced by market forces and government policies.