Robert Besser
24 May 2025

TOKYO, Japan: Honda is shifting gears on its electric vehicle (EV) strategy, opting to prioritize hybrids as demand for full battery-powered cars softens globally.

At a press conference this week, the Japanese automaker announced it was reducing its planned investment in EVs and software by 30 percent—to 7 trillion yen (approximately US$48.4 billion)—and revising its target for EVs to account for 30 percent of sales by the 2030 financial year.

"It's really hard to read the market, but at the moment, we see EVs accounting for about a fifth by then," said CEO Toshihiro Mibe.

Instead, Honda will expand its hybrid lineup with 13 new models slated for global release between 2027 and 2030. The company is also developing a hybrid system for large-size vehicles, which is expected to be released later this decade.

The company aims to sell between 2.2 million and 2.3 million hybrids by 2030, representing a sharp increase from the 868,000 sold in 2023. That compares with a total of 3.8 million vehicles sold overall by Honda in 2023.

The strategic pivot comes amid a broader recalibration across the auto industry, with several manufacturers scaling back EV investment as consumers favor hybrids and governments ease back on emissions mandates and EV targets. In the U.S., President Donald Trump recently revoked a Biden-era executive order pushing for all new vehicles to be electric by 2030.

Earlier this month, Honda paused a C$15 billion ($10.7 billion) plan to build an EV production facility in Ontario, citing weakening demand. Despite this, the company maintains its long-term goal of selling only zero-emission vehicles—including battery-electric and hydrogen fuel-cell models—by 2040.

Honda joins other carmakers retreating from aggressive EV expansion. Nissan recently scrapped plans for a $1.1 billion battery plant in Kyushu, while Jaguar Land Rover has reportedly shelved its electric vehicle plans for Tata's upcoming factory in southern India.