Honda has slashed its plans to invest in electric vehicles (EVs) by 30 per cent, or £15billion, after lowering its expectations for EV sales in the coming years.
The Japanese automotive giant says it now expects around 20 per cent of its car sales to be electric by 2030, rather than 30 percent, amid dwindling demand.
The company has also cut its budget for new EV projects by almost a third to seven trillion yen (£36.2billion) – and will invest more immediately in expanding its range of hybrid vehicles instead.
It comes amid industry predictions that demand for electric cars will wane as governments, including Britain, ease the pressure on car makers to go fully electric.
US President Donald Trump has revoked an executive order made by his predecessor Joe Biden to require all new cars in the States to be electric by 2030.
The UK, meanwhile, has given car makers permission to continue selling hybrid vehicles – which still have internal combustion engines – until 2035, but will still ban the sale of purely fossil fuelled vehicles by 2030.
Honda’s cuts come just days after Nissan scrapped plans to build an £822million battery production plant in Kitakyushi, Japan and said it would cut 20,000 jobs.
It had originally hoped to make 30 per cent of its car sales electric by the end of this decade, scaled back from a target of 40 percent that was set in 2021.
Honda is scaling back its sales targets for electric vehicles amid slowing demand (pictured: one of its e:Ny1 electric cars)
CEO Toshihiro Mibe (pictured) said it was ‘hard’ to read the demand for electric vehicles, but insisted they hadn’t been ‘abandoned’ by car buyers
Mr Mibe said the company would now focus on hybrid vehicles. Most of its UK range is now sold as a hybrid, including the Civic (pictured)
But Honda CEO Toshihiro Mibe told a press conference: ‘It’s really hard to read the market, but at the moment we see EVs accounting for about a fifth by then.’
He added: ‘EV investment hasn’t been abandoned, just pushed back.’
Mr Mibe suggested that the changes in regulation made by the US and UK Governments, among others, were stopping people from buying electric cars – and hit out at the recent tariff wars for creating ‘increasingly uncertain’ trading conditions.
He said of the demand for hybrids, however: ‘Current market demand for our HEV (hybrid electric vehicle) models is high.’
Honda has been slower than other manufacturers to embrace hybrid technology, having originally invested heavily in hydrogen fuel cell technology which has not been widely adopted as an alternative fuel.
Its range of UK vehicles is, however, now available as hybrid, including the Jazz supermind, Civic hatchback and CR-V and HR-V crossovers. It offers one pure electric model, the e:Ny1, in Britain.
The company is now pushing hybrids as part of a transition towards EVs – seeing them as a stepping stone on the way to pure electric for drivers.
It now expects to sell around 2.3million hybrids by 2030, out of a total of 3.6m cars. By comparison, Honda’s forecasts suggest sales of no more than 750,000 EVs.
Data from the Society of Motor Manufacturers and Traders (SMMT) suggests demand for electric vehicles is stagnating in Britain.
Demand for electric vehicles has stagnated in Britain despite manufacturers slashing prices. They have called for the government to offer incentives to encourage EV uptak
Car makers have been slashing the prices of their electric models in a bid to drive sales – and are pleading for government intervention to encourage EV uptake.
Under the Zero Emissions Vehicle (ZEV) mandate, car makers are expected to make 28 per cent of their sales electric by the end of this year, a target they are unlikely to hit.
As of April, 20.7 per cent of new car sales to date in 2024 are electric, while almost half are still petrol. On average, just over a fifth of cars sold in the last 12 months were electric, according to SMMT data.
Car firms have called for greater government support for electric cars to encourage people to ditch petrol and diesel. The Government has not offered grants towards new electric cars for three years.
Mike Hawes, chief executive of the trade body, said earlier this month: ‘EV uptake is still being heavily and unsustainably subsidised by the industry – which is why a compelling package of measures from government is essential if consumers are going to make the switch.’
