May 20 (UPI) -- The Honda Motor Company announced Tuesday it will cut back on its previous investment plan for electric vehicle technology in response to its disappointment in the growth of the EV market.
Honda Global CEO Toshihiro Mibe gave remarks at a press conference in Tokyo where he stressed the company plans to achieve a goal to "achieve carbon neutrality for all products and corporate activities" by 2050, and that EVs are the best way to do so, which is why it first made a decision to move toward the "popularization of EVs."
However, he also claimed that there is an increase in "uncertainty" in regard to the EV market, which he says has slowed down due to factors like changes in international trade policies and environmental regulations. As a result, Mibe said that Honda's announced plan for 2024 to invest 10 trillion yen toward electrification of its vehicles will be reduced to seven trillion from now through the fiscal year that ends in March 2021.
This is based on a decision to back off of a plan to establish an EV value chain in Canada and build production plants dedicated to EVs.
Mibe explained that due to the changes to its previous plan, Honda's global EV sales ratio in 2030 is expected to fall below its former target of 30%. However, due to a reportedly high demand for hybrid electric vehicles, or HEVs, Honda is going to make its HEVs that are set to go to market in 2027 a linchpin feature while the interest in EVs is expected to eventually rise.
The intended goal of all these plan changes is to increase its total automobile sales volume by 2030 beyond the current level of 3.6 million units, all on a foundation on a targeted HEV sales figure of 2.2 million units.
Mibe further said that while investments that are set to start in fiscal 2027 will decrease, the company hopes to make over 12 trillion in cash from its motorcycle division and through an increase in HEV sales. He added that despite the investment decrease, it hopes to generate over 1.6 trillion yen for its shareholders.
"Revising its resource allocation by responding to market changes swiftly and flexibly, Honda will establish automobile business that can prepare for the future while also improving profitability," Honda said in a press release that summarized Mibe's statements. "By adding the strong earnings power of its motorcycle business, Honda will pursue further growth even under uncertain market conditions."
As for its EVs and HEVs, Mibe said Honda also plans to upgrade these vehicles with intelligent technologies that will provide stronger advanced driver-assistance systems, or ADAS, that it expects will in turn improve its EV business.
