“Contrarian Chairman Akio Toyoda Proves His Point on Hybrid Vehicles: Major Automakers Scaling Back on Electric Cars, the Rise of Hybrids Begins.”

As the automotive industry undergoes an electric revolution, Honda has made a surprising shift in its future strategy. Instead of pursuing its dream of having electric vehicles (EVs) account for 30% of its global sales by 2030, the company has officially scaled back this ambitious target. CEO Toshihiro Mibe refers to this as “a change in the planned roadmap” rather than a complete abandonment of electrification.

Previously, Honda had planned to invest 10 trillion yen (approximately $69 billion) in its electrification strategy by 2031. However, this figure has been reduced by about 30% to 7 trillion yen ($48 billion), indicating a shift in investment plans amidst a slowdown in EV demand.

According to Reuters, CEO Mibe now expects EVs to account for only around 20% of sales by 2030, down from the previous target of 30%. Additionally, the company will introduce 13 new global hybrid models from 2027 to 2030. The Marysville, Ohio plant will be restructured for flexible production of both EVs and hybrids, catering to the changing US market, which demands strategic flexibility.

Honda has canceled its plans to launch a large SUV electric vehicle in 2027 due to declining EV demand in the US. However, the company remains committed to the “Honda 0 Series,” which includes electric sedans and SUVs scheduled for production from 2026.

According to Honda Australia’s CEO, Jay Joseph, despite the company’s commitment to achieving carbon neutrality by 2050, consumer demand currently favors hybrid vehicles. Hybrids already account for 50% of sales in Australia and are expected to reach 90% by 2026. Honda will continue to expand its hybrid lineup with models like the CR‑V and ZR‑V.

Honda is not giving up on electric vehicles but is temporarily shifting its focus to hybrids in the short term. The company is adjusting its investments, production plans, and market strategies, particularly in the US and Australia, where EV charging infrastructure and supportive policies are in flux.

Honda aims to sell 1.3 million hybrid vehicles annually by 2030, doubling its 2023 sales figures. The company’s CEO emphasizes that hybrids are a “bridge” to the EV era, reflecting a cautious approach to the global shift toward electrification.

This strategy aligns with a global slowdown in the electric vehicle market. Leading automakers like Toyota, Nissan, Mercedes-Benz, and Ford have also canceled or delayed major EV projects due to high production costs, declining demand, and unstable tax policies.

For instance, Maruti Suzuki, which holds nearly 40% of the Indian automotive market share, has announced plans to launch multiple hybrid vehicles in 2025 before introducing its first EV in 2026. Toyota is also investing in a new hybrid battery plant in Karnataka state to meet the surging demand for hybrid vehicles.

“The automotive industry doesn’t work by flipping a switch; hybrid vehicles are the stepping stone for the mass market to embrace electric cars,” said Jeff Schuster, executive vice president of automotive forecasting at GlobalData.

Toyota’s chairman, Akio Toyoda, has been criticized by investors and environmentalists for pouring billions of dollars into hybrid vehicles. Toyoda has consistently warned consumers about the high costs of fully electric vehicles and the underdeveloped infrastructure for charging.

“I owe Toyota an apology,” said Adam Jonas, an analyst at Morgan Stanley, who had confidently predicted that government support and consumer demand for fully electric vehicles would quickly render the hybrid market obsolete.

By 2025, Toyota’s chairman, Akio Toyoda, expects to sell five million hybrid vehicles. Instead of rushing into the EV race at all costs, he has chosen a more realistic path that is more accessible to the average consumer.

“Toyota anticipated the complexities from the beginning. They said we need to take our time and pursue multiple paths,” said Carl Vine, a portfolio manager at M&G and a Toyota shareholder.

Consumers are also increasingly favoring hybrid vehicles over fully electric ones, as evidenced by personal experiences like Lisa’s, a 34-year-old marketing professional from San Francisco, who switched from an electric vehicle to a hybrid after a disappointing experience with her EV. She shared her story with The Atlantic: “I loved my electric car, but I was frustrated by the limited range and the hassle of finding charging stations whenever I traveled back home. When the Toyota Prius Prime (PHEV) came out, I bought it with the clear expectation that it would serve me well for both daily commutes and longer trips without range anxiety.”

Lisa’s Prius Prime can travel up to 40 kilometers on electricity alone, enough for her daily commute with overnight charging. For weekend trips to Napa or Lake Tahoe, the gasoline engine automatically kicks in, eliminating range anxiety. Through an app, Lisa can monitor her fuel savings, which amount to 60% compared to her previous gasoline-powered car. The longer battery life and cheaper charging costs compared to gasoline are clear advantages.

Lisa is not alone in her choice. Many of her colleagues have encouraged her to switch to a hybrid after experiencing similar disappointments with their EVs. In the “Green Cars SF” group chat, members share their satisfaction with hybrids, considering them a safe, cost-effective, and environmentally friendly option.

Sources: Reuters, Financial Times