Another Manufacturer Bites the Dust!
Honda pulls the ripcord on its e-car offensive. The Japanese car manufacturer has announced that it is canceling several planned e-models and significantly revising its electrification strategy. The decision could result in a loss for Honda for the first time in decades.
To be more specific, Honda is ceasing the development and market launch of three electric vehicles that were originally intended for the North American market: the Honda 0 SUV, the Honda 0 Saloon, and the Acura RSX. These vehicles were part of the so-called “0-Series”, with which Honda actually wanted to enter the global e-car market with a stronger offensive from the middle of this decade.
Honda Capitulates to Trump
The company cited a significantly more difficult market environment as the primary reason behind this decision. Demand for electric cars in the USA has recently noticeably slowed, while the political framework conditions and subsidy programs have changed under the leadership of Donald Trump. Under these challenging conditions, model production would cause further losses in the long term, according to Honda.
The strategic turnaround has massive financial consequences. Honda now expects a net loss of up to 690 billion yen (around $4.3 billion) for the current financial year, after previously expecting a profit of $1.83 billion. A significant part of the burden is due to write-downs on technologies and production facilities already developed for the canceled models.
First Loss in Many Years Looms
Overall, the realignment of the electric strategy could result in costs of up to 2.5 trillion yen – the equivalent of around $15 billion. This means the company is facing an annual loss for the first time since its IPO in the 1950s. Honda is also responding to several structural problems in the global car market. In addition to weaker demand for e-cars in North America, the Honda Group is also struggling with increased competition from China, where local manufacturers are dominating in terms of software features and development speed.
Honda wants to balance its strategy better and focus more on hybrid vehicles in the future. These are currently considered more profitable and should help the Group to economically cushion the transition phase to electromobility. Despite the change in course, Honda is sticking to its long-term climate targets. The Group is still aims to become climate-neutral by 2050 — albeit with a much more flexible electrification strategy than previously planned.
The plan to build only electric cars by 2040 is history. “Realistically, this is difficult to achieve,” said Honda CEO Toshihiro Mibe at a press conference. Honda is much more successful with its motorcycle division, which is highly profitable.
