Honda Abandons 2040 ICE Phaseout, Shifts Focus to Hybrids and Revises EV Strategy

Honda has officially announced it is abandoning its original target of completely phasing out internal combustion engine (ICE) vehicles by 2040 and is revising its electrification strategy. The company now plans to launch 15 new hybrid models by 2030, covering mainstream segments such as sedans and SUVs, making hybrid technology the focal point of its development over the next several years. In 2021, Honda had set an ambitious goal of achieving a fully battery-electric or hydrogen fuel-cell vehicle lineup by 2040, investing heavily in dedicated EV platforms, battery development, and overseas electric vehicle manufacturing facilities. However, its pure electric vehicles have underperformed globally—particularly in its two core markets, China and North America—failing to replicate the sales success of its ICE vehicles. Weaknesses in cost-effectiveness, intelligent features, and supply chain integration have turned its EV business into a financial burden. This fiscal year, Honda reported a loss exceeding $9 billion—the company’s first annual loss in nearly 70 years. Faced with high electrification costs and disappointing market responses, Honda has decided to reassess its strategic direction. Hybrid vehicles are now seen as a more pragmatic choice for the current phase, as they do not rely on extensive charging infrastructure, offer significant fuel efficiency advantages, entail lower purchase and maintenance costs, and avoid issues like battery performance degradation in cold weather and unstable resale values. Honda’s mature i-MMD hybrid system, known for its cost control and reliability, is expected to help stabilize profitability. Honda emphasized it will not entirely exit the pure EV segment but will adopt a more conservative approach, selectively deploying EVs only in key markets. This strategic shift is not isolated: in recent years, numerous global automakers have either postponed ICE phase-out timelines or scaled back EV production targets. Japanese rivals like Toyota and Nissan have also maintained a multi-path strategy, continuing to develop ICE, hybrid, and pure electric vehicles in parallel. Currently, the global EV market’s growth is slowing due to factors such as high battery costs, uneven charging infrastructure, consumer range anxiety, and low EV resale values. The industry increasingly recognizes that while electrification remains a long-term trend, the transition must be balanced with profitability, technological readiness, and market demand—requiring a more measured and pragmatic pathway.