Being one of the last to market isn’t always a bad thing. Honda shifts its focus due to challenges in the EV market, focusing its investments elsewhere.
There’s no denying the upheaval in the US market for just about anything. Administration changes in Washington, D.C., have turned nearly everything upside down from where it was a year ago. This leaves many automakers wondering if they should continue to invest in electric vehicles, and brands like Honda and Ram that haven’t gone as deep into this segment as others might back out before it’s too late.
The shifting of aggression
Honda had an aggressive EV strategy, but that’s quickly changing. With weak EV sales and demands in the United States, coupled with regulatory uncertainty, the brand intends to shift gears and cut $21 billion from its electrification plan. Where will they invest this money? This investment will move over to hybrids, which have become more popular than ever before. Focusing on hybrids could be the right step for Honda and for several other automotive brands, but it might be too late for some. Thankfully, it’s not too late for Honda to make this change.
The new announcement
The latest news from Honda is a cut of its original goal. Despite being one of the last brands to enter the EV market and being reliant on partnerships with GM and Sony to build electric vehicles, Honda had a goal of achieving 30% EV sales globally by 2030. That goal is now uncertain, but it seems to be consistent with electric vehicle market. This means the investment into fully electric vehicles will be reduced, and that money will instead go to hybrids. This is a change for now, but the long-term goal toward electrification continues to be strong.
“This is a switch in the planned course, but our long-term direction toward electrification remains unchanged.”
– Honda CEO Toshihiro Mibe
Lack of support
This change for Honda to slow its approach to EVs is partially due to the new tariff policies and lack of regulatory clarity under the latest American government administration. This current administration shows little to no support for electric vehicles, which means Honda, and other automakers, should take a hard look at their EV investments. It might make more sense for the automotive industry to back away from EVs in the United States for the time being.
Does that mean leaving EVs altogether?
Despite early investments in fully electric vehicles in the US, many automakers could back away from them in America and still develop them in other countries. Many Asian and European countries embrace EVs and will welcome continued development in these areas, allowing automakers to develop vehicles that will be part of their sales plans going forward. This might leave the United States behind in this segment for now, but the next administration might be much more open to electric vehicles and the environmental benefits they provide.
Have automakers skipped a step?
Some brands changed quickly from gas and diesel-powered vehicles to EVs without first going through hybrids and plug-in hybrids. With the slowing demand for EVs and the continued challenges they present to drivers, It might be time for other automakers to follow Honda’s lead in the EV world. Instead of pushing for full electrification, automakers could transition to hybrids and plug-in hybrids, giving drivers that necessary transition from fossil fuel dependency through electrically assisted powertrains. Hybrids allow drivers to enjoy the same power and performance as gas-powered vehicles while receiving improved efficiency and lower emissions from the electric motor system included in these vehicles.
How will Honda retool for hybrids?
Part of the Honda EV strategy was to retool the plant in Marysville, Ohio for EVs, but now it will be set up to product both EVs and hybrids. This allows the company to continue to develop EVs while pushing hybrids, which is the new focus. Honda also continues to focus on its motorcycle division and advanced safety technologies to provide drivers with the most advanced technology in an effort to achieve zero traffic fatalities in its vehicles. That long-standing goal is still a strong focus for the brand.
The right move at the right time
Before Honda got too deep in the EV world, they are able to pull out, shift direction, and focus on hybrids amid the cooling EV market in the United States. That may not be the case for many other automotive brands, but will be the right change for Honda, which has historically competed directly with Toyota.