Honda has scrapped its plan to fully transition to electric vehicles by 2040
Japanese automaker Honda Motor has revised its long-term strategy and abandoned its plan to transition entirely to the sale of electric vehicles and fuel-cell vehicles by 2040. The company changed course amid financial difficulties and a slowdown in the electric vehicle market.
Honda made this decision after posting a loss for the first time in nearly 70 years of public operation, largely due to challenges in its electric vehicle division.
Despite the challenging situation, the company expects to return to profitability in the near future. Honda states that it anticipates an improvement in financial performance as early as this year.
Previously, the company’s president and CEO, Toshihiro Mibe, actively supported a strategy of completely phasing out internal combustion engines and developing electric vehicles. However, changes in the global economy and politics have forced management to revise its plans.
One of the factors was the shift in the U.S. market following Donald Trump’s return to power in the United States. The company also acknowledged that it was unable to adapt its strategy quickly enough to new market conditions and changes in government policy.
Back in March, Honda canceled the launch of three electric vehicle models planned for the North American market. This was one of the first signs of a shift in the Japanese brand’s strategy.
In addition, the company continued a major review of its business. Specifically, Honda announced the suspension of development of the Afeela electric vehicle, which was being created in partnership with the Sony Group.
The automaker also announced its intention to cease car sales in South Korea by the end of 2026.
Amid a global slowdown in demand for electric vehicles, an increasing number of automakers are reevaluating their ambitious plans for the full electrification of their model lineups. Honda has become one of the largest companies to officially acknowledge the need to revise its previous development strategy.
Earlier, He Xiaopeng, founder and CEO of Chinese electric vehicle manufacturer Xpeng, stated the need to accelerate the development of autonomous driving in China and skip intermediate stages, moving directly to Level 4. He emphasized that to achieve this, Beijing needs to adjust its regulatory framework and policies more quickly.
