KATHMANDU: Several major automakers are reassessing their electric vehicle (EV) strategies after spending nearly $70 billion on electrification programs that are now being scaled back. Changing policy conditions in the United States and slower-than-expected EV demand have forced companies to review earlier investment plans.
Honda has become the latest automaker to adjust its strategy. The company has canceled three planned pure electric models that were scheduled for production in the United States, citing weakening EV demand in markets such as the U.S.
The decision follows similar moves by Ford Motor Company, General Motors, and Stellantis. These automakers have recently reduced or delayed several EV programs as market conditions shift.
According to industry estimates compiled by Auto News on March 12, the four automakers together have spent or written off nearly $70 billion in EV-related investments. The figure does not include other companies such as Porsche AG, which has also begun slowing parts of its electrification plans.
Changes in the U.S. Government policies have also influenced the market. The White House recently shifted its approach towards encouraging gasoline vehicle production and removed the federal $7,500 EV tax credit, which had previously supported EV demand.
As a result, EV registrations in the United States dropped significantly. In December last year, registrations fell 48 percent year-on-year to 75,427 vehicles, and EV market share declined from 9.9 percent to 5.3 percent.
Ford Motor Company has reported that adjustments to its EV strategy have already cost the company about $21 billion. The automaker canceled its planned three-row electric SUV and halted production of the Ford F 150 Lightning after sales fell below expectations.
Stellantis expects about $26 billion in costs related to its revised EV strategy and has already canceled several electric models. Meanwhile, General Motors suspended production of the Chevrolet BrightDrop electric van in Canada and converted a Michigan plant originally planned for EV production to build gasoline pickup trucks.
Honda is also expected to face major financial impacts. The company estimates around 2.5 trillion yen in costs and losses linked to the strategy change. As part of the adjustment, Honda has canceled planned electric saloon and SUV models and also ended development of the all-electric Acura RSX project.
