Demand cools + policy relaxing Honda (HMC.US) electric vehicle strategy "brakes"

Due to the sustained low demand for electric vehicles in major global markets and the relaxation of environmental regulations, Honda Motor Co., Ltd. Sponsored ADR (HMC.US) announced a reduction in its investment in the electric vehicle sector and lowered its sales expectations. CEO Mibe Toshihiro stated at the annual business briefing held on Tuesday that the Japanese automaker's long-term investment in electric vehicles and software will now only be 7 trillion yen (483 billion dollars), a significant decrease from the 10 trillion yen announced last year. "Investment in electric vehicles has not been abandoned, just postponed," Mibe said. Based on the current market downturn in demand and the popularity of hybrid models, Honda has adjusted its electric vehicle sales target for 2030. The latest forecast shows that out of its global sales volume of 3.6 million vehicles by 2030, the proportion of hybrid models will increase to 2.2 million (originally planned for 2 million). At the same time, Mibe stated that the proportion of pure electric vehicle sales is expected to remain at around 20%, or between 700,000 and 750,000 vehicles. Due to the impact of President Trump's tariffs on imported vehicles and parts, Honda expects to lose $3 billion in annual profit last week. In addition, due to weakened market demand, Honda has decided to delay the implementation of its plan to build an electric vehicle supply chain in Ontario, Canada by two years. The plan originally included a battery factory with an annual capacity of 240,000 vehicles and an electric vehicle assembly plant. Earlier this year, the European Commission proposed to relax the stricter emission regulations originally scheduled to be implemented by the end of 2025.