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Honda is dialing back its ambitious EV push and doubling down on hybrids amid slowing demand.

On Tuesday, CEO Toshihiro Mibe said the automaker would cut its EV investment by 30% from $69 billion (10 trillion yen) to $48.4 billion (7 trillion yen) through the 2031 fiscal year. The move is aimed at stabilizing Honda’s future in a slowing EV market.

The Japanese company will focus on ramping up its hybrid lineup, citing “changes in environmental regulations” and “a slowdown in EV market expansion” as key drivers.

“Due to the recent market slowdown, our EV sales ratio in 2030 is now expected to fall below the previously announced target of 30%,” Mibe said.

The shift comes amid broader turbulence in the auto industry.

In the first four months of 2025, EV sales in North America — the US, China, and Mexico — rose by just 5% compared to 25% in Europe and 35% in China, according to data from EV research firm Rho Motion.

Meanwhile, the International Energy Agency said in its Global EV Outlook 2025 that higher tariffs could further raise EV prices and slow down sales growth.

In response, Honda plans to launch 13 new hybrid models globally starting in 2027, with the aim of selling 2.2 million hybrids annually by 2030. Despite the pivot, Honda said it remains committed to reaching 100% zero-emission vehicle sales by 2040.

The announcement follows the collapse of a proposed $50 billion merger with Nissan that would have created the world’s third-largest automaker. Nissan rejected the deal over concerns about being treated as a subsidiary.

Honda is also ordering US employees back to the office at least 80% of the time by October, saying in-person work is key to “facing a rapidly changing business environment and increasingly competitive market conditions.”