Honda Shifts To EVs, Slashes China Gasoline Car Output By 19%

Honda Motor Co. HMC will reduce its production of gasoline vehicles in China by 19% starting this October, marking a strategic shift toward electric vehicles.

The Japanese automaker will cease operations of one production line at its joint venture Dongfeng Honda, which has an annual capacity of 240,000 units, beginning in November.

Additionally, in October, GAC Honda, another of its facilities with a capacity of 50,000 units annually, will be completely shut down.

These changes are part of Honda's effort to accelerate the “steady shift” to EVs, reported Bloomberg.

Honda’s production capacity in China, currently around 1.5 million units, will see a reduction of 19% due to these measures.

Previously, Nikkei reported that Honda intended to reduce gas-powered vehicle production capacity in China by about one-third.

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Japanese automakers, including Honda, have been facing difficulties in China due to their comparatively weak electric car lineup and stiff competition from domestic companies like BYD Company BYDDY and Tesla Inc. TSLA, whose vehicles are manufactured at Tesla’s Shanghai factory.

In a related move, Nippon Steel Corp NISTF announced earlier this week that it would exit a joint venture in China, attributing the decision to declining sales among its major clients, the Japanese automakers, who are losing market share in the region’s largest economy.

The Dongfeng Honda facility, which currently produces models such as the Civic and Life, will transition to producing auto parts and conducting research.

These models will be manufactured at another plant within China. Meanwhile, the GAC Honda plant, responsible for the Accord plug-in hybrid, will be repurposed as a warehouse and for other uses.

Price Action: HMC shares closed lower by 3.17% at $31.17 on Wednesday.