Honda halts development of key electric vehicle models

On Thursday, Honda halted development of its first ground-up electric vehicles (EVs), stopping work on the electric Acura RDX, the Honda 0 sedan, and the Honda 0 SUV. Very little information had been shared with outsiders about these three models prior to the decision. Following this move, Automotive News reported on Friday that Honda is also stopping production of the Prologue, an EV model designed and built in partnership with GM. The decision draws a clear distinction between the cancellation of Honda’s internal, ground-up EV projects and the termination of the Prologue, which was manufactured by GM.

The retreat follows financial pressure, as Honda suffered nearly $16 billion in losses last year. The company pointed to competition in markets including the U.S. and China, where it has struggled to match newer EV manufacturers on value. In its recent earnings report, the company stated: “Honda was unable to deliver products that offer value for money better than that of newer EV manufacturers, resulting in a decline in competitiveness.” These headwinds in China contributed to the company’s nearly $16 billion in losses last year.

The decision to shelve these EV programs could backfire, leaving Honda behind in the transition toward software-defined vehicles (SDVs)—vehicles with core capabilities that can be upgraded over time. Consumers buying EVs from competitors like Tesla, Rivian, and BYD have grown accustomed to frequent updates, infotainment software, and driver-assistance systems. While SDVs do not have to be EVs, the two transitions often go hand in hand because an EV battery makes it easier to power computers and perform over-the-air updates when the vehicle is parked. By stepping away from EV development, Honda misses the opportunity to resolve legacy engineering decisions carried over from internal combustion engine (ICE) platforms. For comparison, Ford CEO Jim Farley noted that legacy engineering decisions left Ford’s electric Mustang Mach-E with a wiring harness that is 70 pounds heavier than Tesla’s. By halting its programs, Honda avoids these immediate development hurdles but misses the critical manufacturing experience and customer feedback needed to compete.

Why it matters

Honda’s decision to shelve its EV programs signals a retreat from the electric vehicle market that threatens its long-term competitiveness against rivals in the U.S. and China.