Restructuring: Honda discontinues production of three electric vehicles

Japanese automaker Honda will cease the development and market launch of three electric vehicle models planned for North America. The company announced this on Thursday. Production of the three models was scheduled to begin at the plant in the US state of Ohio later this year. The decision affects the Honda Zero SUV, the Honda Zero sedan, and the Acura RSX. Honda stated in a press release that "the commencement of production and sales of these three models in the current market environment with significantly declining demand for electric vehicles would lead to further losses in the long term." At the same time, the company announced that the complete restructuring of its electric vehicle division could cost the group up to 2.5 trillion yen (13.6 billion euros).

Honda had unveiled the models at CES in Las Vegas at the beginning of last year and announced their market launch for this year. The now discontinued models were based on Honda's new electric car platform "Honda 0" (Honda Zero), for which the company intended to develop a new operating system and its own System-on-Chip (SoC). These would have been the company's first fully in-house developed electric vehicles.

Profound Transformation of the Automotive Industry

Honda justified the decision with a "re-evaluation of the vehicle electrification strategy due to various factors, including recent changes in the economic environment." The automotive industry environment is undergoing profound change, and future prospects remain uncertain, the company added. "In the US, the growth of the electric vehicle market has slowed due to various factors, including the easing of regulations for fossil fuels and adjustments to incentive programs for electric vehicles," meaning the discontinuation of government subsidies.

Honda CEO Toshihiro Mibe said at a press conference that demand for electric vehicles has fallen sharply, making it "very difficult" to maintain profitability, reports the news agency Reuters.

New Hybrid Models Announced

In China, Honda faces intensified competition, according to its own statements, as new electric vehicle manufacturers are launching software-driven vehicles, including advanced driver-assistance systems, in increasingly shorter production cycles. "In this challenging competitive environment, Honda has been unable to offer products with a better price-performance ratio than newer electric vehicle manufacturers, leading to a decline in competitiveness," the company said. In addition, the profitability of gasoline and hybrid models is declining due to newly introduced tariffs.

Given the recent slowdown in the growth of the US electric vehicle market, it will review its resource allocation and further expand its hybrid models, Honda announced. Competitiveness is to be increased through the introduction of next-generation hybrid models and a reallocation of resources. In addition to its main markets of Japan and the USA, Honda intends to expand in India and increase its model range and cost competitiveness there. The automaker plans to announce details of the realignment of its medium- to long-term strategy for the automotive business at a press conference in May of this year.

(akn)