Honda cuts 2030 EV target after profit falls on US tariffs
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Honda Motor Co. reported a sharp decline in earnings for the nine months through December, underscoring the combined pressure of US tariffs and a cooling electric vehicle market.
The Tokyo based automaker said profit for the three quarters totaled 465.4 billion yen, or about $3 billion, down 42% from 805.2 billion yen a year earlier. Sales slipped 2.2% to 15.98 trillion yen, or $102.6 billion. The results mark the second straight year that profit declined over the same period.
Honda maintained its full year profit forecast at 300 billion yen, or $1.9 billion, even as it acknowledged headwinds tied to trade policy and changing consumer demand.
Tariffs imposed under President Donald Trump have weighed on Japanese exporters, including automakers that rely heavily on the US market. Although tariffs on automobiles and auto parts were reduced last year to 15% from an earlier 25%, the measures continue to erode margins for companies shipping vehicles and components across borders.
Shares of Honda rose 2.1% in Tokyo trading Feb. 10, while the Nikkei 225 index gained 2.3%, extending a record setting rally for a second straight session.
Electric vehicle strategy reset
Beyond tariffs, Honda pointed to a slowdown in US electric vehicle demand as a significant factor in its earnings decline. The company said it was lowering its global EV sales ratio projection for 2030 to 20%, down from a previous target of 30%.
Honda also confirmed it had canceled development of some electric models, citing rapid changes in market conditions. The recalibration reflects broader uncertainty about the pace of EV adoption in the United States, where policy support has shifted.
The Trump administration has rolled back several programs introduced during the Biden administration that were designed to accelerate the transition to electric cars and trucks. The White House has taken a more favorable stance toward oil and gas production, creating a less predictable environment for automakers investing heavily in battery powered vehicles.
For Honda, which sells models such as the Accord, Civic and Odyssey, the adjustment signals a more cautious approach to electrification. While the company remains committed to expanding its EV lineup, it is aligning production and development plans more closely with near term demand.
One bright spot was Honda’s motorcycle division, which delivered relatively healthy performance and helped offset some of the weakness in the automotive business.
Broader pressure on Japanese automakers
Honda’s results mirror trends across Japan’s auto sector. Toyota Motor Corp., the country’s largest automaker, recently reported a decline in profit and announced a leadership transition, with Chief Financial Officer Kenta Kon set to become chief executive and president.
Tariffs remain a structural challenge for Japan’s export driven economy. As part of negotiations, Japan pledged to invest $550 billion in US projects, a commitment intended to strengthen economic ties and mitigate trade friction.
Domestic politics may also influence the outlook. Prime Minister Sanae Takaichi, who took office in October as Japan’s first female leader, secured a decisive parliamentary election victory over the weekend. Her Liberal Democratic Party is expected to push policies aimed at bolstering growth through increased government spending, particularly in technology and defense.
For Honda and its peers, the path forward involves balancing global production footprints, managing exposure to trade policy shifts and recalibrating electric vehicle ambitions in response to market realities. The company’s decision to lower its 2030 EV target underscores how even established manufacturers are adjusting long term plans as tariffs and consumer sentiment reshape the competitive landscape.
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