Why Honda put the brakes on EVs

A major carmaker has reportedly paused plans to accelerate its switch to electric cars, following President Trump’s decision to slash incentives in the US.

Honda has reportedly put the brakes on a large electric SUV, following President Trump’s decision to cut EV incentives in the US.

The Japanese giant is preparing to roll out a new range od battery-powered models based on the Concept 0 SUV and sedan unveiled at the CES conference in Las Vegas this year.

It originally planned to follow the five-seat SUV and sedan with a seven-seat SUV, but has reportedly pulled the plug on that project.

Honda's 0 electric SUV and sedan. Picture: Supplied

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A report by the Asia Nikkei states that Honda suspended plans to introduce a big EV, as demand for sizeable electric cars has been weaker than expected.

President Trump’s decision to axe a $7500 Federal tax credit for EV customers reportedly contributed to Honda’s stance.

Honda scraps EV SUV development due to decreased US demand https://t.co/7WSDyknZTC

— Nikkei Asia (@NikkeiAsia) July 5, 2025

The change to EV concessions is part of sweeping legislation described by Trump as a “big, beautiful bill”, and an “abomination” by Tesla chief executive Elon Musk.

US President Donald Trump and Elon Musk are no longer political allies. Photo: ROBERTO SCHMIDT / AFP

Honda has reportedly slashed about ¥7 trillion ($31 billion) from its research and development budget for electric cars.

It’s a tough call from a brand that aimed to merge with Nissan six months ago.

The approach is not surprising, as large electric cars have struggled to find traction.

Kia’s EV9 is the first electric seven-seater in Australia.

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2023 News Corp Australia Car of the Year finalist, Kia EV9. Photo: Thomas Wielecki

The critically acclaimed model starts from about $106,500 drive-away, and runs to about $139,500 plus optional extras in Australia.

As a result, Kia has sold just 165 examples of the EV9 in Australia this year, far less than the similar-sized combustion-powered Sorento that has found 5165 homes in the first six months of the year.

That sort of sales ratio is not uncommon for electric models.

Honda's 0 electric SUV. Picture: Supplied

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Mercedes has sold 25 combustion-powered S-Class sedans for every electric EQS this year, while VW’s cheaper Tiguan and Tiguan Allspace outsell the electric ID.4 and ID.5 by about 10 to 1.

Several manufacturers have pushed back electric car sales and production targets in Australia and beyond.

Ferrari has reportedly put off plans to build an electric SUV, Lamborghini has pushed back an electric model based on the next-generation Porsche Cayenne, Audi has extended a self-imposed deadline on combustion-powered products, and Mercedes has promised to introduce more V8-powered petrol models in response to customer demand.