Honda executives expose a harsh reality of the electric vehicle market

Although it seems like a very new technology, the American car market is adapting to fully electric vehicles.

According to data from Kelley Blue Book and Cox Automotive, more than 330,463 electric vehicles were sold in the second quarter of 2024, an increase of 11.3% over the same period in 2023.

Related: Toyota bets the house on cars people actually want to buy

The data also shows that electric vehicles currently account for 8% of total car sales, which can be credited to a wide range of entities producing electric models. Trusted automakers like Ford, General Motors, Kia, Hyundai, and startups like Tesla, Rivian, and Lucid bring a slew of electric vehicles of all shapes and sizes to today’s discerning customers.

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

Honda is a new player in the EV space. In addition to its diverse range of compacts, sedans, SUVs and petrol hybrids, it sells just one EV: the Prologue SUV. According to KBB and Cox data, Honda moved just 1,516 Prologues last quarter, a significant 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 electric vehicle supply chain to benefit from the IRA tax credit 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.

2024 Honda Prologue at the New York International Auto Show

James Ochoa

“The customer is always right”

In an appearance at Monterey Auto Week, first reported by The Drive, American Honda President and CEO Kazuhiro Takizawa and Honda Global Executive Vice President Shinji Aoyama explained that while electric vehicle sales are growing, the slowdown sales growth is due to the supporting EV infrastructure not growing alongside it fast enough.

Essentially, customers won’t be attracted to electric vehicles, no matter how much discount automakers offer, if fast and convenient charging is either a hassle to find near their homes or workplaces, or leaves owners to wait “charge pigs” suck blood.

“You can’t force the customer to change their mind, really, and to some extent (you can incentivize them), but we just can’t force people who live in, say, the Midwest without charging stations.” , Takizawa said. “Even with incentives they will not switch from ICE (Internal Combustion Engine) to BEV (Bac. I think it will be very difficult to force people to go for it. We have to prepare the ecosystem gradually and let them migrate slowly slowly.

“Change. We’re closely monitoring the number of (new) charging guns per electric vehicle, so it’s not a very fast increase, but it’s gradually and steadily increasing.”

More business with electric vehicles:

• Waymo is finding a new way to bring chaos to quiet city streets
• Gavin Newsom’s ‘EV mandate’ is threatened by the US Supreme Court
• The new BMW EV smart app is a privacy nightmare

Demand and Supply

Honda Global Executive Vice President Shinji Aoyama noted that he expects the growth of electric vehicles to take time and consist of many steps leading to mass adoption of electric vehicles in the United States.

He believes that because the system that powers cars with internal combustion engines has been so deeply embedded in drivers’ psyches as the only option, people will have to adopt electric vehicles at a time when charging is hard to come by to upgrade.

“It’s not a matter of ICE or electric vehicles, but of changing the ecosystem as electric vehicle penetration increases,” Aoyama said. “The (already established) ICE ecosystem starts with mining, refining, gas stations and ICE cars. Meanwhile, EVs have totally different ecosystems, so it’s a whole societal change and societal issues, so it may take time to change.

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

Related: Your Local Car Dealer May Have This Shocking Opinion About Electric Vehicles

Where there are electric vehicles, there are better services.

The data shows that to encourage people to buy electric vehicles, a robust and reliable charging network for electric vehicles must be created, and dealers must be able to satisfy customer curiosity.

According to a new survey of 250 “dealer leaders” in the United States by CDK Global (the same CDK Global that was implicated in the massive data breach earlier this summer), 49 percent of dealers said their sales teams ” I’m not excited.” not at all about selling electric vehicles.”

Many dealers that responded positively were located in electric vehicle “hotbeds,” areas of the country where electric vehicle adoption is somewhat high. In EV-friendly states on the West Coast, such as Washington, Oregon and California, 46 percent of dealers had sales staff who were “moderately” or “very excited” to sell EVs. At the opposite end of the country, 44 percent of New England dealers reported that their sales staff felt the same way.

In contrast, many of the low responders are in areas of the US where their dealerships are the only sales and service departments for miles, and EV charging infrastructure is not as well developed as it is on the coast.

A dealer in Montana told CDK, “We live in a rural area with long distances between cities… It’s just not a viable alternative to ICEs (internal combustion engines).”

Additionally, a North Dakota dealer said the state’s notoriously cold winters would make EVs environmentally unsuitable.

“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 freeway because of bad weather, they would freeze to a stop.”

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

Related: Veteran fund manager sees world of pain coming for stocks