Legacy Carmakers Retreat As EV Startups Launch Lower-Cost Models

Honda Motor

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(RTTNews) - Honda Motor Co. [HMC] has announced the cancellation of three planned electric vehicle projects for the U.S. market, contributing to the company's expected first annual loss since its public listing in 1957. This move highlights the growing pressure on traditional automakers as demand for electric vehicles slows in the U.S.

The company cites weaker-than-expected EV market expansion, reduced incentives, easing fossil fuel regulations, and tariff-related pressure on gasoline and hybrid profitability as factors behind this decision.

The shift away from these EV projects could cost Honda approximately 2.5 trillion yen or $15.7 billion over time, with a projected net loss of up to 630 billion yen or $3.94 billion for the current fiscal year.

Honda's announcement adds to a growing list of major automakers, including Ford Motor Company, General Motors, and Stellantis, that have taken multibillion-dollar charges related to delayed or canceled electric vehicle investments. Meanwhile, EV-focused startups like Rivian Automotive and Lucid Group are moving forward with more affordable product offerings.

Rivian recently opened orders for its R2 midsize SUV, starting at $57,990 for a performance version, with lower-priced trims scheduled for 2027. Lucid has also unveiled details of its upcoming Cosmos model, expected to cost less than $50,000 and offer 200 miles of range in just 14 minutes of charging.

Lucid plans to begin production of the Cosmos in Saudi Arabia this year, before ramping up U.S. manufacturing at its Arizona plant. Rivian's R2 is expected to be built in Normal, Illinois, and later supported by a future plant in Georgia.

Despite the weaker EV momentum in the U.S., several global automakers, including Toyota Motor Corporation, BMW, Volkswagen, and Hyundai Motor Company, continue to expand their electric offerings, particularly in Europe, Asia, and the Middle East.