Honda Pauses Development of Large Electric SUV Amid Declining US EV Demand

According to Nikkei, Honda has suspended the development of a large electric SUV due to the expected continued decline in electric vehicle (EV) demand in the US market. This electric SUV is a crucial part of Honda's EV strategy. The company plans to reduce investments in the electric vehicle sector and instead focus on increasing the production of profitable hybrid vehicles. Honda originally intended to launch a new series of electric models starting in 2026, expanding the lineup to seven models by 2030. The suspended large SUV was scheduled to be launched around 2027, targeting family users and similar demographics to boost sales. However, Honda will continue to advance its flagship sedan and mid-size SUV models. The decision to cancel the development of this large SUV is due to slowing market demand and the outlook that policies in its primary market, the US, may further hinder the adoption of electric vehicles. Former President Donald Trump has been gradually rolling back electric vehicle incentives put in place by the Biden administration. Last week, a significant tax reduction and spending bill was passed in the US, eliminating tax credits for electric vehicle purchases. SUVs are very popular in the US due to their excellent off-road capabilities, accounting for 60% of new car sales. However, the research and procurement costs for larger models (including batteries and chassis) are significantly higher. Potential limitations on sales could impose financial pressure on the company. In response to the global slowdown in demand, Honda has significantly cut its investments related to electric vehicles before 2030 from 10 trillion yen to 7 trillion yen, with the cancellation of this large SUV development project being part of these adjustments. In reassessing its electric vehicle plans, Honda aims to boost production of its more competitive hybrid models. The company plans to launch 13 models globally over the next four years starting in 2027, aiming for sales of 2.2 million units by 2030, a 120% increase from the expected sales in 2025. In the short term, expanding profitable hybrid models will ensure revenue and prepare for the adoption of electric vehicles. Globally, several automakers are reevaluating their electric vehicle strategies. Ford has also halted the development of large electric vehicles, reflecting a broader reassessment of its EV strategy. In addition to Ford, Nissan has canceled the development of two electric vehicles originally planned for production in the US, and Toyota has postponed the production timeline of one electric SUV from 2026 to 2028.