Honda 0 Electric SUV & Sedan Cancelled As Losses Mount, To Shift Focus Back On Hybrids

In a shocking move, Honda Motor Co. has announced that it will be scrapping the 0 electric SUV and sedan, as well as the Acura RSX, as part of a major restructuring strategy. The Japanese automaker acknowledged that mounting losses and strong competition from Chinese automakers led to the decision to reconsider its position on EVs. The company will book up to $15.8 billion in losses, due to several factors such as US tariffs, declining demand for EVs, and a decline in competitiveness of Honda products in Asia. Honda will now scale back on EVs and will shift focus back on hybrid technology for its major markets - the US and Japan.

The decision comes just months after the Zero electric SUV and saloon were showcased. Moreover, the 0 electric SUV was slated to arrive in India as a full import this year, helping establish the brand’s electric mobility strategy. This, too, stands cancelled. Meanwhile, the Honda Zero Alpha electric SUV, showcased at the Japan Mobility Show last year, and will be made in India for domestic and export markets, is slated to arrive next year.

Honda said it came to the conclusion of cancelling the development of three electric models due to several factors. The Zero SUV and saloon, as well as the Acura RSX were all destined for production in the US. However, the company determined that the current business environment wasn’t favourable for EVs, especially in the US, and this would result in further losses over the long term. The automaker said the major policy changes in the US created an unfavourable impact on the business, including easing of fossil fuel regulations and revisions to EV incentives. It further said that profitability was impacted due to the unfavourable tariff policies on petrol and hybrid vehicles.

Honda said its “automobile business has fallen into an extremely challenging earnings situation due to various factors, including its inability to respond flexibly to these changes in the business environment, compounded by a decline in the profitability of gasoline and hybrid models due to the impact of newly imposed tariffs.”

With the decision to cancel the Zero EV series, Honda said it will write-off and impairment losses on tangible and intangible assets that were intended to be used for the production of the three models. It will also write-off losses related to additional expenses resulting from the cancellation of the development and sales of these models.

Honda also said that it wasn’t able to compete with what customers in China value more in automobiles today, with preferences shifting from fuel efficiency and cabin space to software-based features that continuously advance to customer preferences. The carmaker acknowledged that this has intensified the competition due to the rapid emergence of newer EV manufacturers that leverage shorter development cycles with respect to software-defined vehicles, including ADAS. Honda says it was unable to deliver products that offer value for money better than that of newer EV makers, resulting in a decline in competitiveness. 

As part of a revitalisation effort, Honda said it will reassess resource allocations and further strengthen its hybrid models, particularly in the US and Japan. Moreover, Honda said it will enhance its cost-competitiveness in India, where it expects market expansion. In other Asian countries, the automaker to aim to enhance competitiveness by introducing the next-generation hybrid models.