Honda Shelves Electric SUV as US Tax Credit Ends

Automaker reconsiders EV strategy amid changing market

Facing headwinds from shifting US policies and a cooling electric vehicle market, **Honda** has reportedly scrapped plans for a large electric SUV slated for a 2027 release. The decision follows the repeal of a US$7500 federal tax credit for EVs, impacting the viability of **Honda’s** electric offerings.

Projected EV Sales Decline

The cancellation is coupled with a recent announcement from **Honda** that it is unlikely to achieve its previous target of 30 percent EV sales by 2030. The automaker cited a recent market slowdown as the primary reason for reassessing its electric vehicle strategy. This includes reevaluating the EV product lineup and the timing of investments, such as the one planned for a comprehensive EV value chain in Canada.

In May, **Honda** stated, “Due to the recent market slowdown, the Honda EV sales ratio in 2030 is now expected to fall below the previously announced target of 30 per cent.”

While an exact figure wasn’t given, projections for EV market share have been adjusted downward across the industry; for example, the Edison Electric Institute now forecasts EVs will account for 27% of new car sales by 2030, down from earlier estimates (EEI).

Impact of Policy Changes

**Donald Trump’s** ‘Big Beautiful Bill,’ which eliminated the US$7500 tax credit, is a significant factor in **Honda’s** decision, according to Nikkei Asia. The publication reports that this policy shift directly led to the cancellation of the large SUV project. The move reflects **Trump’s** well-known skepticism towards electric vehicles.

Remaining EV Plans

Despite shelving the large SUV, **Honda** is reportedly still moving forward with its other EV models planned for North America. The mid-size SUV and sedan, previewed by the 0 SUV and 0 Saloon concepts earlier this year, are still slated for launch beginning in 2026. These models are part of **Honda’s** broader 0 Series, which aims to introduce seven EVs to the US market.

It remains uncertain how significantly the cancellation of the large SUV will affect **Honda’s** overall plan to launch seven EVs in the US through its upcoming 0 Series.

Investment Adjustments

Initially, **Honda** committed 10 trillion Yen ($108 billion) to EV development until early 2032. This investment has since been reduced to seven trillion Yen ($75 billion), with some of the reduction stemming from the postponement of its Canadian EV value chain plans.

**Honda** had previously allocated CAD$15 billion (A$16.75 billion) to establish an EV assembly and battery plant in Ontario for the North American market, in partnership with a joint venture partner.