The auto industry slowdown continues as Honda and General Motors (GM) adjust their strategies in response to a changing market. Honda announced on Tuesday that it is reducing its electric vehicle (EV) investment target, citing declining U.S. demand. Initially planning to invest $69 billion in its electrification strategy by 2031, the Japanese automaker has now lowered the figure to $48 billion. The company attributes this decision to increasing uncertainty in the automotive sector, particularly driven by the slowing growth of the EV market and evolving environmental regulations.
Honda’s Revised EV Plans
Honda’s Chief Executive Toshihiro Mibe stated that the company is committed to its long-term electrification goals but acknowledged that the roadmap faces delays. “The environment surrounding the automobile industry is changing day by day,” Mibe said. “Uncertainty in the business environment is increasing, particularly due to the slowdown in the expansion of the EV market.”
GM Stops Exporting to China
Meanwhile, GM also made significant adjustments to its strategy. On Monday, the company halted exports of its Chevrolet Tahoe SUVs to China and scrapped plans to send additional high-end models to the country. GM had begun exporting the Tahoe under a program called the Durant Guild, but economic changes led the automaker to restructure its operations in China. The Durant Guild exports account for less than 0.1% of GM’s total vehicle sales in China, according to a GM spokesperson.
Tariff and Policy Challenges
The domestic auto industry faces numerous obstacles, including the ongoing trade war. President Trump’s 25% tariff on car imports has added pressure, and in March, S&P Global downgraded its 2025 U.S. vehicle sales forecast by 700,000 units. This comes alongside the continued 30% levy on Chinese goods and a 10% tax on U.S. imports into China. Additionally, Republicans have proposed ending the Inflation Reduction Act tax credits for EV buyers, and the Trump administration has rolled back auto emissions standards.
Slowing EV Demand and Consumer Sentiment
Recent data suggests a slowdown in EV demand. The installation of high-speed chargers fell by over 21% in the first quarter of 2023 compared to the previous year. BloombergNEF revised its 2023 forecast for U.S. charging installations down by 20%, predicting just 285,000 installations. Analyst Ash Wang warns that installations could drop by 30% or more annually by 2030 if current trends continue.
Tesla’s Struggling Reputation
Tesla, the largest U.S. EV maker, is also feeling the effects of souring consumer sentiment. An Axios Harris Poll 100 released on Tuesday revealed a 30% drop in Tesla’s reputation over the last decade, with the company’s standing plummeting from “Excellent” to “Poor.” Tesla’s shares fell by more than 50% between December and April, though they have recently rebounded after CEO Elon Musk reassured investors about his commitment to the company.
CATL’s IPO and Market Dynamics
As U.S. auto manufacturers struggle, CATL, the world’s largest EV maker, launched its initial public offering (IPO) in Hong Kong on Tuesday. Despite U.S. investors being locked out of the listing, CATL’s shares surged 16% on the first day of trading, signaling strong investor interest in the global EV market, even as domestic challenges continue for American automakers.
