Honda executives expose a cruel reality of the EV market

2024 Honda Prologue

Though it seems like a very new technology, the American auto market is acclimating to fully electric vehicles.

According to data from Kelley Blue Book and Cox Automotive, over 330,463 EVs were sold in the second quarter of 2024, a growth of 11.3% from the same period in 2023.

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The data also shows that EVs currently make up 8% of total automotive sales, which can be credited to the vast array of entities producing electric models. Trusted automakers like Ford, General Motors, Kia, Hyundai, and start-ups like Tesla, Rivian, and Lucid bring a cornucopia of EVs in all shapes and sizes for today's discerning customers.

However, 8% is still only a fraction of the greater auto market, and legendary Japanese automaker Honda (HMC) represents an even smaller fraction.

Honda is a new player in the EV space. Alongside its diverse lineup of gas-powered compacts, sedans, SUVs, and hybrids, it sells just one EV: the Prologue SUV. According to KBB and Cox data, Honda only moved 1,516 Prologues last quarter, a vast improvement from just 19 in the first quarter.

The automaker is investing heavily in EV technology, allocating tens of billions of dollars to build a robust, IRA tax credit-friendly EV supply chain in North America. However, in a recent interview, two Honda executives explained the true reality of the EV market and why the company isn't getting more aggressive with its EVs.

'The customer is always right'

In an appearance during Monterey Car Week, first reported by The Drive, American Honda President and CEO Kazuhiro Takizawa and Honda Global Executive Vice President Shinji Aoyama explained that while the sales of EVs are growing, the slowdown of sales growth is because of the infrastructure to support EVs is not growing alongside it fast enough.

In essence, customers will not be drawn to EVs, no matter how much of a discount automakers provide, if fast, convenient charging is either a hassle to find near their homes or workplace or leaves owners waiting on blood-sucking "charger hogs."

“You can’t force the customer to change their mind, really, and to some degree [you can incentivize] them but we just can’t force the people living in, say, the midwest, with no charging stations,” said Takizawa. “Even with incentives they will not change from ICE [Internal-Combustion Engine] to BEV [Bac. I believe it will be very difficult to force people to go for it. We need to prepare the ecosystem gradually and let them migrate little by little.

“It’s changing. We’re closely monitoring the number of [new] charging guns per electric vehicle so it’s not a very rapid growth, but gradually and steadily it is increasing,”

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Demand and Supply

Honda's Global Executive VP Shinji Aoyama noted that he expects EV growth to take time and consist of many steps that will lead to mass EV adoption in the United States.

He feels that since the system that fuels cars with internal combustion engines has been drilled so deep into motorists' psyches as the sole option, people will have to adopt EVs at a time when charging is difficult to find in order to improve it.

“It’s not a question of ICE or EVs but of the change of ecosystem as penetration of EVs increases," said Aoyama. "The [already established] ICE ecosystem starts with petroleum mining, refining, gas stations, and ICE cars. Meanwhile, EVs have totally different ecosystems, so it’s a question of an entire societal change and societal issues so it may take time to change.

“Battery EVs are the most effective to reach carbon neutrality, so we will keep our long-term view and we expect that this ecosystem will change step by step.”

Related: Your local car dealer may have this shocking opinion about EVs

Where there are EVs, there is better service.

Data shows that to encourage people to buy EVs, a robust and reliable EV charging network must be established, and dealers must be able to satisfy customers' curiosity.

According to a new survey of 250 "dealership leaders" across the United States conducted by CDK Global (the same CDK Global that was involved in the massive data breach earlier this summer), 49% of dealers said their sales teams "weren’t excited at all about selling EVs."

Many dealers that responded positively were located in EV "hotbeds," areas of the country where EV adoption is somewhat high. In EV-friendly states on the West Coast like Washington, Oregon, and California, 46% of dealers had sales staff that were "moderately" or "very excited" to sell EVs. On the opposite end of the country, 44% of dealers in New England reported that their sales staff carried the same sentiment.

Conversely, many of those who responded poorly are in areas of the U.S. where their dealers are the only sales and service departments for miles, and EV charging infrastructure is not as well developed as it is on the coasts.

One dealer in Montana told CDK, "We live in a rural area with large distances between towns … It's just not a viable alternative to ICE (Internal combustion engines)."

Additionally, a dealer in North Dakota said that the state's notoriously cold winters would make EVs inappropriate for the environment.

“It’s primarily a range issue, which is always compromised when the heater is on full blast," they told CDK. "If someone had to pull off the interstate due to inclement weather, they’d freeze to death at a rest stop.”

Honda Motor Co., which trades on the New York Stock Exchange under ticker HMC, is up 1.81% from the opening bell, trading at $32.60 at the time of writing.

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