Honda is closing its factories and switching to electric cars
Japan's Honda Motor plans to cut back on gasoline-powered car production in China and close some of its plants. The reason is falling sales and the rapid growth of the electric vehicle market. The company will shut down one plant this year, and another may be closed in 2027, according to Reuters.
Honda is embarking on a major restructuring of its business in China. The company plans to phase out part of its gasoline-powered vehicle production and gradually transition to electric cars.
The first step is shutting down the plant it operates jointly with Guangzhou Automobile Group. They plan to close it as early as June of this year. Another plant, established in partnership with Dongfeng Motor, may cease operations in 2027.
This decision means a significant reduction in production. Gasoline car production capacity in China will roughly halve—from 960,000 to 480,000 vehicles per year. The company’s total annual production volume will also drop—to about 720,000 vehicles.
The reason is a sharp shift in the market. Local electric vehicle manufacturers in China are growing rapidly and are actively taking market share away from international brands. One of the main competitors is BYD, which is rapidly increasing its sales. Honda acknowledges that the situation is forcing a change in strategy. The company is betting on electric vehicles and is already launching a large-scale restructuring.
Estimates suggest that the business restructuring could cost around $15.7 billion. In essence, this is a major pivot: from traditional gasoline-powered cars to electric vehicles. And China has become one of the key markets where this transformation is happening the fastest.
Ford has also announced a massive recall of about 1.4 million F-150 pickups in the U.S. due to a technical issue that could cause the vehicle to suddenly shift into a lower gear.
