Honda Motor, opens new tab, said on Tuesday that it was scaling back its investment in electric vehicles given slowing demand and would be focusing on hybrids, now far more in favour, with a slew of revamped models.
Japan's second-biggest automaker after Toyota Motor (7203.T), opens new tab also dropped a target for EV sales to account for 30% of its sales by the 2030 financial year.
"It's really hard to read the market, but at the moment we see EVs accounting for about a fifth by then," CEO Toshihiro Mibe told a press conference.
Honda has slashed its planned investment in electrification and software by that year by 30% to 7 trillion yen ($48.4 billion).
It's one of a number of global car brands dialling back EV investment due to the shift in demand in favour of hybrids and as governments around the world ease timelines to meet emission rules and EV sales targets.
U.S. President Donald Trump has, for example, revoked a Biden administration executive order that sought to ensure all of new vehicles sold in the United States by 2030 were electric.
Honda plans to launch 13 next-generation hybrid models globally in the four years from 2027. At the moment it has sells more than a dozen hybrid models worldwide, though just three in the U.S. - the Civic, which comes in hatchback and sedan versions, the Accord and the CR-V.
It will also develop a hybrid system for large-size models that it plans to launch in the second half of the decade.
The automaker is aiming to sell 2.2 million to 2.3 million hybrid vehicles by 2030, a huge jump from 868,000 sold last year. That also compares with a total of 3.8 million vehicles sold overall last year.
Earlier this month, Honda announced it had put on hold for about two years a C$15 billion ($10.7 billion) plan to build an EV production base in Ontario, Canada, due to slowing demand for electric cars.
Honda said, however, that it still plans to have battery-powered and fuel-cell vehicles make up all of its new car sales by 2040.
Other automakers that have scaled back EV investment include struggling rival Nissan (7201.T), opens new tab, which this month abandoned a plan to build a $1.1 billion battery factory on Japan's southwestern island of Kyushu just months after it had announced the project.
Jaguar Land Rover has shelved plans to build electric vehicles at parent company Tata Motor's (TAMO.NS), opens new tab upcoming $1 billion factory in southern India, sources have said.
