In partnership with
The Kirchner Report is 100% independent automotive journalism. If you want to support our coverage, subscribe for free, become a paid member, or leave a tip.
We all know that EV sales in the United States are having a bit of a moment. With the elimination of any federal incentives, it was expected that there would be a sales decline until things stabilized. The unknown at the time, though, would be the United States engaging in war with Iran that would send oil prices skyward and put a strain on the global energy business.
People aren’t flocking to EVs — at least not yet — but it does seem like a weird week to announce pulling the plug on your EV efforts in the United States, killing three all-new models. One of those models was fairly close to launch, as well.
You can read the entire announcement here, but there are a couple of paragraphs that stand out as concerning beyond the “the United States doesn’t want EVs” argument.
The News Source 2.3 Million Americans Trust More Than CNN
The Flyover cuts through the noise mainstream media refuses to clear.
No spin. No agenda. Just the day's most important stories — politics, business, sports, tech, and more — delivered fast and free every morning.
Our editorial team combs hundreds of sources so you don't have to spend your morning doom-scrolling.
Join 2.3 million Americans who start their day with facts, not takes.
Moreover, in China, what customers value more in automobiles is shifting from hardware features, such as fuel efficiency and cabin space, to software-based features that will continuously advance according to customer preferences. This has intensified the competition due to the rapid emergence of newer EV manufacturers that leverage their short product development cycles and strengths in the area of software-defined vehicle (SDV) technologies, including advanced driver-assistance systems (ADAS). In such a difficult competitive environment, Honda was unable to deliver products that offer value for money better than that of newer EV manufacturers, resulting in a decline in competitiveness.
Honda admitting that it can’t be competitive — for now in China — because of newer EV manufacturers is a pretty big admission. While certainly the company is putting this mostly at the feet of the United States and its current trade policies, if the company can’t compete against the dedicated EV manufacturers, it’s not good long-term.
The Chinese EV makers are continuing to spread around the world. Canada has opened the door for sales in its country, and Mexico has had Chinese companies selling in its market for a while. Most people assume that at some point, China will sell cars directly in the United States.
💡Do you have information about Honda’s EV strategy? I would love to hear from you. Using a non-work device, you can message me on Signal at chadkirchner.1701, or with another secure communication method.
To be fair to Honda, the unpredictability of the economy in one of its biggest markets — the United States — does mean that money that could’ve been spent to improve competitiveness was rather spent trying to figure out how to make its current business work with tariffs, pulling back of green investments, and so on.
For the long-term, though, Honda is going to have to figure it out. And I don’t think the Afeela is going to be it. I’m not sure what the solution is, other than spending the money on engineering, research, and development to make affordable EVs. Trump won’t be president forever, and the longer the Strait of Hormuz is essentially shut down, the quicker the global economy will grind to a halt. People are going to want affordable, fuel-efficient cars, and they’ll be willing to look anywhere to find them. That might mean buying Chinese EVs. Honda — and the rest of the industry — will need to be prepared.