Honda just SCRAPPED their EV plan. Here’s why it’s GENIUS.
Honda wants to be fully electric by 2040. Anything’s possible, but my gut’s telling me that Honda’s not going to be able to do that. At the end of last month, Toyota saying, “Hey, this three row EV we’re planning to make in Indiana, well, let’s maybe send it to Kentucky and delay it by a couple years.” You have Hyundai continuing to suspend EV production at their EV plant in South Korea over and over. And then this was a shiv right into the back of EV development in the United States when Trump signed the bill that kills the EV tax credit starting September 30th. And then straight out of Japan, we get Honda scrapping EV SUV development due to decreased US demand. Guys, if you enjoy automotive news, I cover it just about every single day on the channel. I still have some car reviews I need to do this week between an electric vehicle. Ironically, the EV6 as well as the refreshed Volkswagen TA. Stay tuned for those reviews. And I will be doing a Honda event. I’ll be good fly not driving flying to California this week to drive some really historic Hondas that you won’t want to miss on the channel. So, make sure you’re subscribed. And if you enjoy this content, I would always appreciate a like button. Hit Arusal. Japanese automaker to redirect investments to profitable hybrids. Go figure. Is this the SUV that Honda’s actually halting? And the answer is no, because this vehicle is still slated to come out out of the Mary’sville auto plant at their BEV factory. This is the first one to come out with the saloon, the kind of like the Lamborghini looking thing that will be coming out, I think, at at the end of 2026. But this is the first one to come out and I think the styling is amazing on it. Think of it as an electric CRV. It looks a lot better than a CRV. I just drove the new CRV. I actually posted a review or first driving impressions on the Sport Touring model last night. So, go and check that out if you want to learn more about the refreshed CRV. But, we’re talking about the development of a large electric SUV. Let me show you. Here we are with Honda’s plans. Now, we haven’t seen anything about this entry-level SUV yet that’s supposed to be coming next year. We now have the design for this midsize SUV. I don’t know why it’s not filled in in this graph. Maybe it wasn’t revealed at the time. Uh probably not when they made this graph because the saloon has modified its look. So this was the original concept. There’s a new prototype. This three row SUV slated for 2027 has essentially been scrapped completely. Not delayed, scrapped. Now what does that mean? I would say all of these after this are in question as well and maybe this one too since we haven’t heard a drip of this entrylevel zero series SUV. But more than likely since it is 2026, it might not be cancelled. Time will tell though, but all like this is gone. I don’t know why you need a third electric SUV. All right, this one’s gone. So this would have been the fourth and they would have had a fifth. It’s just really, really confusing. this this lineup. It made no sense. Now I get I guess this is globally, but you got to keep in mind the Zero series are not slated for China whatsoever. The Zero series is for Europe, Japan, and the United States and Canada. So, North America. All right. So, maybe some of these were really tailored for like the European market or something and then like essentially a Civic EV by the end of this decade or the start of the next decade. Who knows what this lineup’s now going to look like? These two for sure are coming in 2026. Everything else is a big question mark and we’ll come back to this article, but the the demand for three row EVs is I like a joke right now. All right, for example, let’s look at the EX90. Who’s going to put $100,000? Well, starting at 80, who’s going to put $80 to $100,000 on an unproven EV three row? All right. Especially, you know, people are a little sensitive to Chinese investments right now. I know a lot of people are. And they wouldn’t want to buy a Volvo EX90 that’s essentially tied directly to a Chinese company. I’m not going to say whether that’s right or wrong. People should have their own beliefs. And the Volvo EX90, uh, I’m not not sold on it. Um, I haven’t driven it yet, but I will be driving the XC90 refresh next week, so stay tuned for that. I’m typically a huge sucker for Volvo vehicles, uh, Chinese relations or not. All right, what else? Well, you have the new Ionic 9, which I almost guarantee is a better vehicle than that EX90 that we just looked at, but a lot cheaper. I haven’t driven this yet either, but I really want to. The the Ionic 9, it’s actually priced pretty respectively for a three row EV SUV. big discounts can be had on it, four or five grand. But, uh, yeah, you can actually lease an Ionic 9 for less than a Highlander. And a Highlander retails for like $11,000 less, a Highlander hybrid versus an Ionic 9. So, but that’s going to change, right? Cuz the EV tax credit is going away by September 30th. So, if you want an EV in the United States, now is the time. Now until September 30th. After that, it’s going to be I mean the the the cost of leasing these things is going to go up more than likely. All right. And then people like the manufacturers are just going to keep pulling out investments into EVs. All right. So, we already talked about those two. The EV9 that I reviewed last year, one of the best EVs I’ve ever driven. I think it’s fantastic. Also, huge price cuts. So, we see these massive price cuts. Rivian also, um I think it’s right here. Yeah. just got a 20% price cut on their leases because they can’t sell these things. All right, they cost a boatload. So, no one’s buying them with cash. Everybody’s leasing until the EV tax credit is gone and even then they depreciate so fast. But, uh what else? What else? We have this Vistic. I haven’t driven this either, but it starts at around $80,000. Price cuts of $8,000 are already happening. I believe this is a pretty new three row EV as well. The market for three three row EVs is terrible. And you got to remember Cadillac Escalade IQ also exists, but that costs more like 150 grand, which is also laughable. If we look at something like a a very powerful hybrid TX, these are around $70,000. And I think a lot of people would rather have that than a $70,000 EV Cadillac L. But let me know in the the comments below. You can get an Acura MDX with a V6 for under $60,000. I think that’s the sweet spot. Otherwise, just get the Type S, right? $77,000 for a Type S. I would pick over all these other vehicles, all these three row EVs that we’ve uh discussed today. So, back to this article, they also mentioned Ford has withdrawn from large EV development. Honda will proceed with introducing his flagship sedan midside SUV models, which prototypes have already been unveiled. Like I mentioned earlier, the decision to cancel development of a large SUV was influenced by a slowdown in demand. I’m also going to say like this came out the day after essentially the tax credit was killed. You have a lack of incentives and if you can’t lease those three row EVs for cheap or or should I say compared to a gasoline three row crossover, they have no shot. And I and I commend Honda here. you know, they’re seeing the the demand for EVs really slow down in the United States or and then you take away the the tax credit, which is a primary motivator of electric vehicles with with that being completely gone and taken out of the lease situation. Honda was Honda’s doing the smart thing here. Absolutely. They’re saying development and procurement costs for large models involving batteries and chassis are significantly higher. Concerns about potential sales volume constraints could exert financial pressure on company operations. We’re seeing all these companies that have three row EVs lose money on them. They’re all discounting them to the moon. They all have a lot of cash on the hood and that is including the EV tax credit which is going to be abolished by September 30th. Once that is gone, it’s going to be really difficult to sell a three row EV. Three row EVs probably are like the least desirable uh form function of EVs in the United States. Anyways, you have two row crossovers, you have sedan EVs, uh even the sedan aren’t doing that well. If you look at like an Ionic 6, for example, but the crossover EVs, the two row EVs are doing the best, right? The Model Y, for example, still sells a ton. But the Model Y, for example, also just lost its global sales crown to the RAV 4 last year. And the RAV 4 is going fully hybrid by the end of this year with the new redesign. So Honda is drastically reducing EV related investments through 2030. Keep in mind, Honda says, “Hey, we’re going to be fully electric or fuel cell.” Which, by the way, also this week it came out that Honda’s pulling back um their investments into fuel cell. Not entirely, but they’re really taking a couple step steps back on fuel cell development. So, they’re also pulling back on battery electrics right now from 69 billion uh which is 10 trillion yen to 7 trillion yen. All right. So, a reduction in what is that? Uh 30%. Scrapping the large SUV development project as part of that adjustment. So Honda could be saving like a billion dollars here by scrapping this three row EV development and which by the time it came out in 2027, there’s going to be little little market for these electric three row crossovers that all already, you know, are taking a lot of money away from the company because they have to be incentivized. So they start talking more about their hybrid plan. So we’re going to go ahead on over to Honda’s official announcement here. This is this is Honda’s uh decision now. Okay, they’re scrapping this three row EV in 2027. And guess what? They have the main battleground for Honda hybrid models is North America. There continues to be a solid demand for largesiz vehicles with spacious interiors and high cargo capacity. And in order to fulfill such demand in a sustainable manner, Hana will develop a hybrid system for largesiz vehicles. So, this this announcement came out uh May 20th. All right. When this announcement came out, I celebrated. I was like in the streets partying. Not quite, but like I was I’m like finally Honda is listening to the consumers, listening to the market, and they’re going to be developing finally hybrids for the Pilot, the Passport, the Ridgeline. If that vehicle even sticks around for a new generation, Acura will finally be getting these hybrids more than likely. I don’t see them going fully electric now uh anytime soon. That is um I’m also the Odyssey. My favorite my favorite Honda probably for families. No, there’s no there’s no doubt. My favorite Honda or Acura for families is the Odyssey. Hands down. Once that gets a hybrid, oh my gosh, I’m going to I I’ll be partying in the streets when that happens. Anyways, this will feature powerful driving performance. All right, if we look at Hyundai’s new hybrid coming out on the Palisade. All right, thank you. AI overview. It’s a 2 and 1/2 L turbo paired with two electric motors combining an output, a combined output of 329 horsepower and 339 pound- feet of torque. They’re aiming for over 30 m per gallon on the highway. Hyundai’s new hybrid system is going to be bonkers for their large platform. It’s already, I think, available um in Korea on the Palisade or or by the end of this year. Now, I will be driving the Palisade this month. It will not be the hybrid. It will be, I think, the V6 model. Thank god that they kept the V6 in the Palisade. Oh my gosh, it’s such a smart move by Hyundai. Maybe they knew like that these companies are no longer going to be punished for not meeting emissions regulations or fuel fuel economy regulations. That was just scrapped in the new build, too. Honda, if they can come out with something competitive like this, hear me out. Would you guys would you guys be more interested if Honda kept their new V6, 3 and a half liter V6 hybrid instead of a 2 L turbo hybrid? With emissions the way they are right now, I would say go V6 hybrid. Honda, your V6s are great. Give us a V6 hybrid. I think that would be awesome. No one else is doing it. I guess uh the the TX 550H+ does it, but that’s essentially completely unavailable. They’re like none in my area whatsoever. All right, but they come out with a V6 hybrid instead of a 2 L turbo hybrid. I know Honda’s 2 L turbos is great, but I think that would help. Like they just redesigned their two their 3 and 12 L V6 double overhead cam versus a single overhead cam. I would love to have a V6 hybrid from Honda. probably wouldn’t get the fuel economy of what this Hyundai would, but people love their V6s. All right. And I think they would have a lot of success there. But we’ll see. We’ll see what Honda because Honda doesn’t say other than featuring powerful driving performance, high towing capability. They don’t say what kind of engine. They don’t give us any details on this new hybrid for large platforms. They want to apply this hybrid system on products launched in the later half or latter half of the 2020s. Well, that three row EV is gone. And so that essentially allows them to focus on this hybrid system and applying this hybrid system to as many large platform vehicles as possible. And here’s the thing with hybrids right now. Hybrids command a higher price compared to gasoline models and people are willing to pay it. Whereas on an EV three row right now, they command a much higher price tag and people aren’t willing to pay it. Look, Rivian’s having to discount their leases 20%. And that includes the EV tax credit. Once that’s gone, it’s going to be really, really ugly. Like I mentioned a million times in this video. So, Honda is going to continue to launch 13 next generation HEV models. That’s that includes, by the way, that includes the the big platform hybrids, but we’ll start seeing it on the new Prelude by the end of this year. All right. This is going to be a new 2 L hybrid in North America. They’re also working on a new 1 and a half liter hybrid for Japan and smaller markets or should I say markets that don’t demand as much horsepower. All right, so this is going to start over four years starting in 2027. Uh so launch 13 hybrids starting in 2027 to build a broad lineup of hybrid models and capture growing HEV demand in the market. Also keep in mind Honda wanted to build an EV supply chain in Canada. Now you have the tariff situation which is just going to make it very difficult for Honda to move forward with building an EV plant and EV supply chain in Canada. I mean could you imagine if if tariffs didn’t happen? I’m not there are pros and cons of tariffs but I’m saying for Honda in this situation that the tariffs may have been like extraordinarily beneficial for them. Could you imagine they build and they still might do it, but they build this entire supply chain for EVs in Canada, okay? And let’s imagine there’s no import tax or whatever on on vehicles. All right? The 25% it’s now two and a half 2% actually 0% on North American vehicles, right? Because of the North America free trade agreement or whatever it is. It’s not NAFTA, it’s a USMCA agreement. Anyways, no import tariffs. So Honda Hanukkah could build a bunch of EVs up in Canada um and then send them to the United States. But even if there was no tariffs on them, imagine a market that doesn’t is is not ready to consume that many EVs. All right? So Honda would have wasted tens of billions of dollars building this supply chain in Canada, which they still might. It’s been put on pause for now. And then maybe they didn’t even plan for shifting production from EVs to potential hybrids at that plant in Canada. It sounds like it was EV only for as most streamlined and most effective EV production as possible just like Tesla. So essentially Honda is doing their own Tesla plant only building EVs in Canada. But now tariffs plus a lack of a EV tax credit plus a cooling demand on EVs. they would just would have burned a massive hole in their pocket by making an EV hub in Canada. And they, like I said, they still might do it. Honda hasn’t altered their plans to be fully electric by 2040, but maybe they’ll push it back a decade. I don’t know. But the way things are right now, Honda’s best at just building the small amount of EVs that they need to out of the Mary’sville auto plant yearbyear. Monitor EV demand. Produce to the demand, not produce due to expectations. I know that’s like you might say, Kirk, everyone’s going to pass Honda. No, Honda, here’s the thing. You can’t waste too much money on EVs right now for the North American market. There’s enough buyers for probably 10 to 15% on average, California being a little bit higher for EVs in the United States. But now that the EV tax credit is gone, where does that where does that lay? Like where is the EV penetration going to be? Okay, is it going to be less than 10%. It wouldn’t make sense for Honda to build this plant up in Canada for an EV supply chain, an EV manufacturing hub. All right, keep it simple. Keep it streamlined. just build them out of Mary’sville, Ohio to reduce costs and not to stick your neck out into a market that is not ready for that sort of EV adoption. All right, as we go back to, you know, the the road map here with Honda, what they were planning for, this is this is smart of Honda. So, think of it like this, okay? They’re killing essentially all these models. Think of it like this. They’re This one’s for sure killed. The rest of them likely killed. All right. And then they’ll just have three electric vehicles, which is all you need in today’s market. Okay? Maybe even more than what you need in today’s market. And then they can really focus all this R&D that they were planning for EVs, focus it almost entirely on hybrids. Now, you might be saying, Kirk, some of this has to go to Europe. That is true. Honda can also do this. Honda can export the Yah, I think that’s what it’s called, their Yah EVs from China to Europe. That’s what they could do. But again, with political situations, that there might be a time where that’s not feasible for um Honda to make EVs in China and ship them to Europe. All right. I think that would I think over time that’s going to kill the European manufacturing force for for any vehicle. All right. If they just allow all these Chinese EVs to come in. All right. That’s the only thing that’s kind of saving the United States manufacturing is essentially such a such a high tariff on Chinese cars um so that they can’t be sold here profitably. This is um this is good for Honda. It’s smart from them. I think they’re going to have fantastic EVs when these come out. I have driven it. I have driven a CRV with the bones of these EVs and it feels like an EV with pretty minimal body roll. Like it handled quite well. felt really wide. Um, but it felt like a fairly like a fairly well done EV. Only I only drove it for like 5 minutes in Japan, but it was an amazing experience to be able to drive it so early about uh probably about a year and a half before it’s available. Um, and so I’m going to end it there. Honda, I like how how realistic they’re being. They’re not doubling down on this EV dream as soon as possible. Now, with EV tax credit gone, everyone else also putting the brakes on EV crossover, three row crossovers specifically, it makes sense. All right, I’ll see you guys in the comments. I’m sure you have some really insightful things and ideas uh to share about Honda’s scrapping of EVs. Okay, I don’t know if this is going to be the first and the last or just the first of many of EV cancellations from Honda. Huh. Time will tell. Thank you for watching. Stay tuned for more news updates here on the channel. Have a great day. Peace.
#HONDA #EV #ZEROSERIES #hybrid
Honda has decided that their EV roadmap and gameplan wasn’t going to work. This is what they’re doing instead.
Sources:
https://asia.nikkei.com/Business/Automobiles/Electric-vehicles/Honda-scraps-EV-SUV-development-due-to-decreased-US-demand
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