Japanese automaker Honda has suffered its first ever loss after a multi-billion dollar writadown of its failed electric vehicle strategy which is resulting in it doubling down on its hybrid plans.
The company late last week announced it had scrapping its EV target and posted an annual loss of 414.3 billion yen ($A3.6 billion), the company’s first annual loss in since listing on the Tokyo Stock Exchange in 1957.
EV losses alone amounted to 1,577.8 billion yen, and overwhelmed the company’s 1,039.3 billion yen profit from other operations, and it faces further pain with another 500 billion yen of EV-related losses expected to be recorded in the new financial year.
The losses included the costs associated with the previously announced cancellation of three planned EVs for the North American market – the Honda 0 SUV, the Honda 0 Saloon, and the Acura RSX.
It also includes the company-wide impact of abandoning its EV targets, which includes scrapping a goal to have EVs account for a fifth of all new car sales in 2030 and a 2040 switch to only electric or fuel-cell vehicle sales.
In its presentation to investors and journalists, Honda blamed its EV woes largely on the turbulent politics of the United States, which is also Honda’s biggest market.
Toshihiro Mibe, Honda’s chief executive, explained that the company’s 2040 target was based on environmental policies enacted under US president Joe Biden – policies which have almost entirely been stripped away under current president Donald Trump.
“A year ago, there was a drastic change,” Mibe said, referring to Trump’s return to the Oval Office. “We have seen a shift from a focus on the environment to the opposite,” adding that the company’s previous EV target “is now not realistic.”
Honda also ran into trouble in its own backyard, however, with the influx of more affordable Chinese EV models from companies like BYD chewing into Honda’s market share across Asia.
The Japanese automaker will now fall into line with its local peers, refocusing its attention on hybrid electric vehicles (HEVs), which it says “are currently in high demand.”
Starting in 2027, Honda will begin launching a range of next-generation hybrid models based on an all-new hybrid system and platform, with a goal of launching 15 hybrid models by March 31, 2030. In Australia, this week, it announced the release of a hybrid Prelude, a car not see for more than two decades.
Mostly, Honda will be targeting new hybrids in North America, and will reallocate all excess capacity at its automotive manufacturing plants in Ohio to the production of petrol and hybrid vehicles, on the way to making all of its North American automotive plants capable of producing hybrid models.
Additionally, Honda and L-H Battery Company joint venture partner LG Energy Solution will convert part of their EV battery production lines at to hybrid battery production.
Honda claims that it will “continue striving to achieve carbon neutrality by 2050”, but hedged its bets by saying, “While carefully assessing the market environment and demand trends in each region, Honda will accelerate a multi-faceted approach to achieving carbon neutrality, which will include EVs, hybrid vehicles, carbon-neutral fuels and carbon-offset technologies.”
Electric vehicles are now only a long-term priority for Honda, with the company promising to only “[lay] the groundwork for introducing a highly competitive EV hardware platform for the future, so that Honda will be well prepared to meet demand when it emerges”.
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