High Battery and Body Development Costs
Electric Sedans and Mid-Size SUVs to Enter the Market
Japanese automaker Honda has reportedly halted the development of a large sport utility vehicle (SUV), which was one of its strategic electric vehicle (EV) models.
According to a report by the Nihon Keizai Shimbun (Nikkei) on July 5, Honda plans to launch its new electric vehicle "Zero Series" starting next year. However, the development of the large SUV, which was scheduled for release around 2027, has been discontinued. The company will proceed with the launch of electric sedans and mid-size SUVs as originally planned.
Nikkei explained, "Honda has determined that demand for large electric SUVs in its key market, the United States, will slow down." The report also stated that the pace of EV adoption could slow further due to policies under the Donald Trump administration.
On July 4 (local time), President Trump signed the "One Big Beautiful Bill," which outlines the core agenda for his second term. As a result, the electric vehicle purchase tax credit promoted by the previous Joe Biden administration will only be applicable until September 30.
Honda appears to be concerned that, for large electric SUVs, the high costs of battery and body development and procurement could put pressure on future management if sales channels are not secured.
Previously, in May, Honda announced that it would revise its plan to invest 10 trillion yen (about 94 trillion won) in electric vehicle and software development by March 2031, reducing the investment by 30% to 7 trillion yen (about 66 trillion won).
Honda plans to expand production of hybrid vehicles instead of increasing investment in electric vehicles.
Nikkei reported, "Globally, automakers are reviewing their electric vehicle plans." The report added, "Ford has canceled the development of large electric vehicles, and Nissan has halted the development of two electric vehicle models that were to be produced in the United States."
It also noted, "Toyota has postponed the production of its electric SUV, originally scheduled for 2026, to 2028."
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