Honda Motor Co. scaled back investment plans and lowered sales targets for electric vehicles, as consumer demand remains lackluster and environmental regulations are weakened in major markets abroad.
The Japanese automaker will now only invest ¥7 trillion ($48.3 billion) in EVs and software in the long term, chief executive officer Toshihiro Mibe said Tuesday, a sizable drop from the ¥10 trillion it announced last year.
“EV investment hasn’t been abandoned, just pushed back,” Mibe told reporters during an annual business update.
Honda also adjusted its EV sales targets through the end of the decade based on a current downturn in demand, and a bump in the popularity of gas-electric hybrids. It now sees hybrids accounting for 2.2 million of 3.6 million in global sales by 2030, up from the 2 million it previously saw.
EVs, meanwhile, could land closer to 20% of global sales, or somewhere between 700,000 and 750,000 units, Mibe said.
Last week, Honda said it’s expecting a $3 billion hit to its annual profit as a result of President Donald Trump’s tariffs on cars and car parts imported to the U.S. Mibe said on Tuesday that Honda’s strength lies in its U.S. production, which accounts for 60% of all cars it sells in the U.S. market.
The U.S. is the largest market for Japan’s top carmakers, which rely on factories in Mexico or Canada to build vehicles that are then sent across the border. But Trump’s 25% tariffs on imported cars that took effect in April have made that an expensive, if not unfeasible option, for many foreign manufacturers.
Honda has also pushed back plans to establish an EV supply chain in Ontario, Canada, by two years, owing to a softening in demand. The previously announced plan for Canada included a battery plant and an EV factory that would have had annual production capacity of 240,000 vehicles.
Earlier this year, the European Commission made a proposal to ease emission regulations that were supposed to get stricter by the end of 2025.
Honda said in December that it aims to double hybrid sales by 2030 in all but China, where battery-powered cars now dominate. Beginning in 2026, it plans to roll out two overhauled vehicle production platforms, along with a pair of gas-electric powertrains it says will be more efficient and more profitable.
Meanwhile, its motorcycle and scooter business remains strong.
Honda sold about 20.6 million two-wheelers in fiscal 2025, claiming 40% of a global market it sees growing to 60 million by 2030, Mibe said Tuesday. The company ultimately wants a 50% share, it said in January, with growth expected in hubs like India, Indonesia, the Philippines and Brazil.
This story was originally featured on Fortune.com
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