Honda Changes Course On EVs, Will Switch Focus To Hybrids

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Honda, under the stewardship of CEO Toshihiro Mibe, seems to be suffering from multiple personality disorder. One day it is going to build EVs with General Motors, then it is not. One day it is going to join forces with Nissan, then it is not. One day it is going to make a major investment in a battery factory in Canada, then it is not. One day it is reconfiguring several factories in Ohio to build electric cars, now it says it is actually going to back away from EVs and produce a slew of new hybrids instead. As for its announced partnership with Sony that is supposed to result in the Afeela game room on wheels, don’t hold your breath.

Just last week, the International Energy Agency said in its EV Global Outlook 2025 report, that 20% of new cars sold worldwide in 2024 were electric, a definition that includes plug-in hybrids as well as battery-electric cars. In all, 17 million of them were purchased globally in 2024. The trend globally for electric cars is up, even though the pace of adoption in the US is slower than anticipated.

Honda right now has the fifth bestselling SUV in America, the Prologue, which just happens to be electric. But despite that success, in what the company called a Summary of 2025 Honda Business Briefing on May 25, 2025, it said its next SUV for America will be a hybrid and that it is cutting its planned investment in electric cars over the next 10 years by 30%, from $69 billion to $48 billion.

Honda Reacts To The Prevailing Political Winds

The press statement cites, “recent changes in the EV market environment and the direction of the strategy realignment” and pledges to aggressively promote ADAS (automated driver assistance programs) with the goal of  “zero traffic collision fatalities” by 2050. While the goal is still to become a net zero company by 2050, for right now Honda says it will prioritize what it calls HEV vehicles in the near term, with 13 new models set to roll out by 2027.

“The environment surrounding the automobile industry is changing day by day. Uncertainty in the business environment is increasing, due particularly to the slowdown in the expansion of EVs in the market due to several factors, including changes in environmental regulations, which had been the premise for the widespread adoption of EVs, as well as changes in trade policies of various countries. In order to maintain its competitiveness in such a business environment and continue to help and inspire people through its mobility products and services, Honda must create new value not only through electrification but also with enhanced application of intelligent technologies, and then offer such value to a broader range of customers in more accessible and affordable ways,” the press release said.

Carscoops reported on May 14, 2025, that Honda is delaying its $15 billion investment in a Canadian battery factory for at least 2 years while it waits for clarity on trade policies. With the failed US administration poised to slap a 25% tariff of Canadian-made vehicles and components, Honda is clearly thinking about what the immediate future holds as the US slides deeper into tyranny.

In the US, Honda will focus on a mixed production system that will build both EVs and HEVs, with the flexibility to shift production between the two as market forces change. The company will need a “resilient supply chain strategy” in order to make the necessary adjustments, depending on market fluctuations in different regions.

“There is no change in the Honda position that EVs are the optimal solution to achieve carbon neutrality of passenger vehicles. Therefore, Honda will steadily carry out initiatives being undertaken to prepare for the future EV shift at the appropriate timing. As for the Honda 0 Series, which will become the main pillar of the company’s future EV business, the first-generation models will be introduced to market next year,” Honda says.

Large Hybrids For The US

“In the North American market, which is the main battleground for Honda HEV models, there continues to be solid demand for large size vehicles with spacious interiors and high cargo capacity. In order to fulfill such demand in a sustainable manner, Honda will develop a hybrid system for large size vehicles, which will feature powerful driving performance, high towing capability and high environmental performance, with an aim to apply this hybrid system on products to be launched in the latter half of the 2020s.” Many in the motoring press interpret this part of the press release as a signal that the Honda Pilot will soon be supplanted by a similar size hybrid model

“While further refining the competitiveness of its products, Honda will launch 13 next-generation HEV models globally, over a four-year span starting in 2027, to build a broad lineup of HEV models and capture growing HEV demand in the market.” Frankly, we minions at CleanTechnica headquarters, who tend to have our ear to the ground when it comes to news about the EV Revolution, are unaware of any such groundswell in customer enthusiasm for hybrids.

Honda already has hybrid options for most of the cars it sells in North America and they differ in certain respects from the conventional hybrids featured by Toyota in that they use two electric motors in the powertrain instead of just one. “One electric motor acts as a generator, creating electricity for the battery and propulsion,” Honda spokesperson Chris Naughton said earlier this year when talking about a new Prelude hybrid that is coming next year, “and the other is a traction motor that propels the vehicle and captures regen when slowing.” In sum, Honda is targeting 2.2 million HEV sales by 2030 worldwide.

Honda’s two-motor hybrid system will be improved to offer enhanced efficiency and better packaging, Carscoops says, and a new all-wheel drive powertrain will be available as well. Honda says it expects the next-generation hybrid system will be 30% cheaper to produce, making it a more cost effective option for the company and helping to keep the cost of those new hybrid models down.

A Candle In The Wind

One hardly knows what to say about Honda’s new marketing plan. It seems to be driven largely by the toxic regulatory environment currently rampant in the US. Honda’s planners have peered into the future and seen dark clouds over North America, which is its largest export market. Oddly enough, its sales in China have been decimated because it has no competent electric cars to offer in a country where EVs now account for more than half of all sales.

The focus on ordinary hybrids instead of plug-in hybrids is also curious, as at least a PHEV can drive on battery power alone for some trips, which seems congruent with Honda’s ambition to become a zero emissions company. In summary, it appears that Honda is being far too timid as it reacts to every ripple in the market instead of charting a course and sticking to it. Perhaps this strategy will serve the company well, but there is also the possibility it signals the beginning of the end for a once proud automaker.

Almost everyone in American has owned a Honda at some point. It would be sad to see it go the way of Pontiac and Plymouth — brands that once enjoyed significant sales success but have since passed from the scene. While Honda is reading the tea leaves and micro-managing the future, the real threat to its existence is taking place in China as we speak.

Someday in the not too distant future, the protectionist dam the US has erected around its domestic car industry is going to break, and when it does, Honda and many of its peers will be swept away in the ensuing flood of competent, affordable electric cars. One wonders if Mibe-san fully appreciates the impact Chinese automakers will have on the industry in the next five years.