Honda is currently North America's most dedicated automaker with EVs.

• EV sales growth has slowed, leading legacy automakers to reduce their EV production goals, according to Kelley Blue Book's Q1 report, which shows a 7.3% EV share of total new-vehicle sales, down from Q4 2023.
• One of Honda Motor Company's top officials in North America reports that the company's recent activity in the transition to electric vehicles is increasing.
• Recent history suggests that Honda's production promises may not always be reliable, as the Japanese auto giant has been late to the game or simply taking advantage of opportunities.

While some legacy car makers are using hybrids as a waystation on the path to electric vehicles, Honda Motor Company is accelerating its North American EV strategy in 2024.

The Japanese company has made several announcements this spring, including an $11 billion investment in a Canadian EV hub and an EV transformation of its Ohio operations.

Honda's EV moves are happening amidst EV pullbacks from other major auto manufacturers and in some cases, shelved EV plans altogether. GM has stopped providing EV production targets to build to market demand, while Ford has delayed about $12 billion in EV investments.

American Honda Motor Co.'s executive vice president, Bob Nelson, stated that each manufacturer follows their own path.

Although Honda is increasing its commitment to electric vehicles, its investment strategy suggests a risk management strategy. Nelson explains that a $700 million investment in establishing EV operations in Ohio allows the company to adapt production to changing market conditions.

Nelson stated that the $700 million investment allows us to produce both ICE and BEV on the same line, which he believes is a smart strategy given the growing market.

"By having all of our functions and experience in one place, we can develop the capabilities, standards, and profits for EVs, which we will use globally as we expand our EV footprint," Nelson stated.

By 2040, Honda aims to have 100% of its vehicle lineup as EVs, and it is currently on track to achieve its goal of having 80% of its lineup be EVs by 2035.

Critics say Honda already late to EV transition

Some analysts believe that Honda's aggressive short-term EV plan is a response to its need to catch up.

Cliff Banks, founder of the Banks Report, stated that they are catching up and are definitely joining the game.

Meanwhile, other automakers are pulling back due to limited customer engagement and high costs.

""Honda may back off from bringing viable EVs to the market due to the high costs involved, as auto manufacturers have experienced in their attempts to do so," Banks said."

It's a confusing market for automakers to time perfectly.

GM CEO Mary Barra stated that the transformation towards a gas-powered fleet will take place over several decades. She expressed her pride in the company's gas-powered fleet. However, a GM spokesman later clarified that the company's goal is to exclusively sell electric vehicles by 2035. GM recently launched its first mass-market all-electric crossover, a version of its popular Equinox model, to dealers.

Despite the EV market stalling and prices dropping, recent sales of Ford's lineup of EVs and hybrids have improved, indicating the difficulty automakers face in predicting the evolving and high investment cost market in the short-term.

Banks expressed skepticism about Honda's plans to produce 240,000 EV units in Canada, citing the company's history of making splashy announcements that have not resulted in actual action.

Nelson stated that while there may be some short-term changes during the transition to battery-powered electric vehicles, we are still in the early stages of this shift. Additionally, Honda is promoting hybrids, with Nelson emphasizing that hybrid models like the CR-V can serve as a "transition car" to help consumers move towards electric vehicles.

An unsettled, if not chaotic, electric vehicle market

Some analysts believe Honda's EV strategy is more than just cosmetic, but rather opportunistic in its long-term plan.

Honda can fill a void left by other automakers as they scale back, according to Cars.com editor Jenni Newman.

Tesla's market share in the EV market decreased from 61.71% to 51.3% in the first quarter, according to Kelley Blue Book's latest survey.

"Tesla's decision to lower prices on their new cars has caused the used car market to become more volatile, but it is not yet in a state of complete chaos," Newman stated.

EV manufacturers such as Honda and Rivian are introducing their own electric vehicles, with Rivian recently upgrading its all-electric R1 pickup and SUV models to enhance range, performance, and computing power using Nvidia chips.

Newman stated that we are uncertain about the outcome.

Honda's luxury brand, Acura, is also introducing its first electric vehicle, which is based on a Cadillac design and includes added Honda-centric styles and features.

In the automotive industry, it is common for companies to collaborate with others in order to gain a competitive advantage. Honda's investment in Ohio will enable them to increase production of the Prologue model.

Automakers face challenges in making quick pivots due to the intricate supply chains that underpin the entire automotive industry. For Honda, becoming fully electric by 2040 aligns with other automakers' transitions, which Newman characterized as "fairly fast" for all. "That is a long time for us and me, but for an automaker, it is the planning they must undertake due to the industry's vast scope and globalization," she explained.

Honda's plan to achieve 100% zero emissions by 2040 involves more than just EVs; fuel cells are also part of the mix. This year, Honda and GM started jointly producing hydrogen fuel cells as an alternative to diesel. Additionally, Honda has been ramping up hiring and construction at an Ohio plant formed by a $3.5 billion joint venture with LG Energy Solution in 2022, which will provide batteries for Honda and Acura EVs.

Honda could have a brand advantage

In a time of uncertainty about EVs, Honda can leverage its reputation as a trusted brand among consumers to increase sales. According to a survey by Edmunds, Honda finished fourth in customer trust to make the best EV, with 8% of respondents choosing the brand. Tesla topped the list at 23%, followed by BMW at 13% and Toyota at 12%. Ford rounded out the top 5.

Despite producing just one fully electric vehicle, Toyota and Honda have made it into the top five in the EV space, according to Jessica Caldwell, Head of Insights at Edmunds. This success sets Honda up well in the competitive EV market.

In April, Honda was the second fastest-selling mass-market car brand on Cars.com.

Despite government incentives and a market downturn, EV prices are becoming more competitive with traditional cars, but consumer sentiment towards EVs remains negative or stagnant. A recent Gallup poll found that EV ownership increased by 3% annually, while the percentage of consumers who expressed serious interest in buying an EV decreased by an equal amount, from 12% to 9%. Additionally, the percentage of Americans who might consider buying an EV in the future decreased from 43% to 35%.

Despite high scores in surveys, EV manufacturers like Honda will still face roadblocks, including political opposition from a portion of the public who have decided that EVs are not for them. This opposition is almost like a political standpoint, so it doesn't matter how good the vehicles are. Edmunds surveys show a partisan divide, with Republicans less inclined than Democrats to buy an EV or support the transition more broadly. Automakers must overcome this obstacle.

Newman advised Honda to act quickly in capitalizing on EVs as brand is an advantage they cannot afford to wait too long to exploit.