Every automaker is pruning its electric car offerings just a little bit or, at least, delaying the rollout of certain vehicles to certain markets. Honda, which briefly sold one of the more popular EVs in the United States as recently as last year, has announced it’s taking a $15 billion charge related to EV development and, most shockingly, killing the next three electric vehicles it had planned for the United States.
Honda made a big show last January of showing off two different electric car prototypes: the Honda 0 Saloon and the Honda 0 SUV. These are futuristic, wedge-y, very Honda-style electric vehicles meant to pick up demand from the built-by-GM Honda Prologue. Importantly, the vehicles were to built in Honda’s Marysville, Ohio plant in order to take advantage of Inflation Reduction Act-related credits. Joining them would be the 2026 Acura RSX, an EV crossover with the name of the old Integra replacement.
None of that is happening now, according to the annual financial announcement from Honda:
In order to improve the current earnings situation as early as possible, Honda considered various options; however, after careful consideration, the company made the decision to cancel the development and market launch of three EV models that had been planned for production in the U.S., namely the Honda 0 SUV, Honda 0 Saloon, and Acura RSX. Honda determined that starting production and sales of these three models in current business environment where the demand for EVs is declining significantly would likely result in further losses over the long term.
Based on this decision, Honda now expects to record 1) write-off and impairment losses on tangible and intangible assets that were intended to be used for the production of these three EV models, as well as 2) losses related to additional expenses resulting from the cancellation of the development and sales of these models.
There is a lot here. First of all, Honda is probably right. None of the electric vehicles planned here were likely to create positive cash flow for the company anytime soon, especially without government assistance. In particular, the 0 SUV and Saloon were so strange and probably so expensive that it wouldn’t make sense.
The Acura RSX is the bigger surprise. Acura dealers have been clamoring for new products, and while a new SUV probably isn’t what they wanted, at least it’s something. Given that these products were intended to be built in Ohio, it’s an open question of what will be built there now. Here’s a hint from Honda:
In light of the recent slowdown in the growth of the EV market in the U.S., Honda will reassess its resource allocations and further strengthen its hybrid models.
Is this just more hybrid development for Ohio? Will Honda pull back from more investment in the United States as Japan weighs whether the investment is worth it, especially considering the tariff decision by the Supreme Court and higher energy costs in Japan?
The timing of this, of course, is terrible. The world is potentially at the start of a new energy crisis and that might drive more people to seek efficient cars. Right now, Honda has the most popular hybrid in America with the CR-V and plenty of popular hybrid versions of other models. The company is already winding down the Prologue and will have maybe nothing to replace it.
After all the hype around these vehicles from Honda, the sudden change is going to be discouraging for any customers or employees who worked on the development which, at least in the case of the RSX, seemed to be far along. Honda CEO Toshihiro Mibe agreed, according to Nikkei Asia:
“I’m fully aware of the passion poured in by many employees, business partners and sales staff, as well as the high expectations expressed by our customers,” Mibe said, admitting the three models were hardly viable under current market conditions.
Clearly, Honda didn’t think it was worth it in the long term to keep trying to make electric cars a thing. My next question is: Will Honda and Sony keep trying to pursue the Afeela 1 EV or is that another dream that doesn’t make sense? What will happen to the company’s “EV Hub” in Ohio?
While the specifics of Honda’s Marysville facility are not out, Automotive News is reporting that the company will try to shift its battery plans into making more hybrids:
Honda said it will channel its electrification resources into hybrids. A new hybrid powertrain and automated driving system are under development for commercialization after 2027, Executive Vice President Noriya Kaihara said.
In North America, Honda will expand its local procurement ratio of components and vehicles for this upcoming hybrid lineup, he said. Honda will also explore shifting battery output in North America from electric vehicle batteries to hybrid batteries at its local joint venture with LG.
The company may also divert some of that production to storage batteries.
“We will put the automotive business back onto a growth track,” Kaihara said.
That is not as easy as it sounds and takes time. Kaihara estimated it won’t be until 2028 for Honda to fully start to feel the impacts of those changes.
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