Honda Kills its EV Plans in the U.S. and Faces an Existential Crisis

Honda’s 0 Series project was intended to be its next generation EV launch with a range of new products that it first unveiled at CES in 2024. And it wowed audiences with a completely new design direction even winning the “Best EV Design” at the 2025 Top Gear Awards.

But a lot has changed in a year for Japan’s second largest car manufacturer and it’s made its first loss in over 50 years.

It’s easy enough to assume that a company like Honda can switch to making great EVs, but for legacy manufacturers, the transition to electric platforms is particularly tough as they need to adapt profit-making factories, onboard new supply chains and re-learn how to engineer cars for an all-electric future. It hurts their core business and there is no easy solution.

Some have tried and failed with multi-fuel platforms, such as Stellantis that also had to write-down a huge loss recently because its EVs were uncompetitive and loss-leading compared to Chinese manufacturers, and their cars just aren’t selling well in China at all which is a large and tough market to crack.

Honda 0 Saloon

However, Honda has chosen to write-down $15.7 bn restructuring it’s EV business primarily in the U.S. and its China operations where conditions are tough to compete on technology, which is an extraordinary claim coming from a company that launched their ASIMO humanoid robot nearly 26 years ago!

Other factors include new tariffs from the U.S. and ending its federal EV incentives that were first introduced under the previous administration, which heavily discounted electric cars.
It’s compounded for foreign companies launching their EV’s if a certain percentage of their powertrain, battery and manufacturing is completed overseas, as new laws disincentive that behaviour.

Interior of the Honda 0 Saloon

Another part of the story is that Honda has been late to the party with their EV rollout. Whilst Chinese manufacturers have been developing and launching EV’s at a seemingly increasing rate over the last 5 years, Honda did not launch much, and neither do they have compelling products.

In the U.K., the funky little Honda e was launched in 2020 and killed off in 2024. It was a small hatchback, full of amazing technology which was way ahead of its time, but it’s price was untenable and it was significantly short on range.

Honda followed up with a revised HR-V, re-engineering it as an electric car and rebadging it as the e:Ny1, but yet again Honda sold this at a premium price well over HR-V money, and yet again the car itself fell short especially in the winter with range massively impacted.

Honda 0 Saloon

But, with the 0 Series cars, Seiji Sugiura, a senior analyst at Tokai Tokyo Intelligence Laboratory, the research arm of Tokai Tokyo Securities said "This decision ⁠was taken at an extremely delicate stage, just before mass production, after substantial budgets had already been committed - suggesting that it was a very tough call."

Honda is now pivoting to hybrids in the U.S. in an attempt to return quickly to profitability, however, it can’t do the same in China and in the U.K. and Europe, hybrids will be here for a limited time only, impacting return on investment opportunities.

Chinese manufacturers are able to adapt and develop at a faster pace, acting more like a start-up company than a legacy car company with a near 80 year history. And Chinese cars are software centric, something that legacy manufacturers are now discovering is key to making great, and compelling EVs.

In other words, Honda is now struggling to compete on product, price and development pace and it is perhaps now facing an existential crisis as opportunities to sell its ICE cars and hybrids will be shrinking in the future.

Let’s hope that Honda’s joint EV venture with Sony, developing the Afeela, will be able to bridge that gap with a model that it can develop and draw from.

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About the Author

Graeme Cobb is a lifelong car enthusiast with a passion for writing about cars, EVs, industry updates and more.

You can find Graeme on 𝕏 at @graeme_cobb or YouTube @REV-EV.