A big news is coming from Honda Motor Co.,Ltd., which has cancelled the launch and development plan for three major upcoming electric vehicles for the North American market. The models affected are the Acura RSX, and Honda 0 Saloon and SUV. Honda has outlined a significant operating expense range of 820 billion yen to 1.12 trillion yen along with equity investment losses estimated between 110 billion to 150 billion yen.
The carmaker also expects special losses of 340 billion to 570 billion yen in its financial results of this year. In long run, the cumulative losses related to the reassessment of its electrification strategy could reach be as much as 2.5 trillion yen.
Reason Behind the Cancellation
In the United States, the administration of Donald Turmp has introduced significant changes to the automotive industry by rolling back policies introduced during the tenure of Joe Biden, which support electric vehicles. Furthermore, the current government has imposed new business traffic that majorly impacted the profitability of both EVs and ICE vehicles. OEMs such as Honda and Ford Motor Company have registered a massive decline in profits.
Furthermore, Honda is struggling to maintain its position amid increasing competition from the Chinese carmakers. The company is finding it difficult to cope up with rapidly changing market dynamics and shifting customers preferences, which are adversely impacting its profitability.
Official Statement
“Honda determined that starting production and sales of these models in the current business environment, where the demand for EVs is declining significantly, would likely result in further losses over the long term”.
Impact on Honda’s Plan for India
This decision could also impact Honda’s product plan for India, which is now expected to be focus more on hybrid vehicles and higher product localization. The electric vehicles (EVs) are still expected to remain part of Honda’s long-term strategy. Earlier, the production-ready Honda 0 α (Alpha) SUV was planned for an India launch, following its debut in Japan in 2027.