They are taking a step back.
Japanese automaker Honda Motor Co. announced on May 20 that it will reduce its investments in electric vehicles (EVs) in response to weakening demand, shifting its focus instead to hybrid models, which are seeing increased consumer interest.
Citing a “recent market slowdown,” Honda revealed it will no longer pursue its earlier objective of having EVs comprise 30% of its global vehicle sales by 2030. “The automotive industry is undergoing rapid transformation, and business uncertainties are growing—particularly due to the slower-than-expected expansion of the EV market and evolving environmental regulations,” the company said in a statement.
While Honda reiterated its belief that EVs remain the most effective long-term solution for achieving carbon neutrality in passenger transport, it said it would continue to prepare for an eventual transition to EVs at a more suitable time.
During a press event on Tuesday, CEO Toshihiro Mibe acknowledged the unpredictable nature of the market, stating, “It’s difficult to project accurately, but we now anticipate that EVs will make up about 20% of our sales by 2030.”
Mibe also disclosed on May 13 that some major investments in Canada would be postponed by two years due to weaker-than-anticipated EV market performance. Additionally, merger discussions between Honda and fellow Japanese carmakers Nissan and Mitsubishi, initiated in late 2023, concluded earlier this year without a deal.
China remains a dominant force in EV production, driven by its “Made in China 2025” industrial strategy, which aims to control key sectors such as battery technology. The country’s long-term development plan for new energy vehicles, now extended to 2035, emphasizes deep global supply chain integration.
Meanwhile, the European Union has softened its stance on carbon emission limits for vehicles. Though EU law still mandates that all new vehicles sold from 2035 onward must be zero-emission, recent adjustments will give automakers more flexibility. Rather than having to meet strict targets annually, manufacturers can now average emissions across the 2025–2027 period.
Some in the EU have pushed back against the 2035 internal combustion engine (ICE) ban. Italian Energy Minister Gilberto Pichetto Fratin previously called the policy “absurd” and urged its reconsideration. Similarly, Volkswagen has announced potential factory closures in Germany and aims to cut costs by €10 billion by 2026 in light of stiff competition from more affordable Chinese EVs.
There are also growing calls for alternative emissions strategies. Manfred Weber, head of the European People’s Party in the European Parliament, argued in an interview that consumers should retain the option to drive petrol or diesel vehicles—so long as carbon emissions are offset, potentially through methods like carbon capture.
