Honda is one of the most popular automakers in the United States and sells, as far as I can tell, the most popular hybrid in the form of the Honda CR-V. For a while, the Honda Prologue was also one of the best-selling non-Tesla electric cars in North America. In a way, every Prologue sold was a little dagger in Honda’s heart.
I talk a lot about affordability here at The Morning Dump, because that’s the biggest consumer concern at the moment. For automakers, it might be uncertainty. What’s going to happen? When is it going to happen?
Honda announced another loss for its automotive business last quarter, split pretty evenly between EV charges and tariff costs. Some of that tariff pain exists to encourage Japanese companies to invest more in the United States, which will certainly happen, though the pace of it may not reach the goals of the current administration.
There’s been a lot of ‘When will BYD get here?’-type questions for years, which ignore the fact that the Chinese conglomerate has had American operations for years. Those operations are now suing over tariffs as everyone is getting in line for a refund if the Supreme Court rejects them.
That’s heavy, man, that’s a lot of heavy news. Let’s end with an Australian Ford.
Honda Takes $1.7 Billion Hit On EVs, Sees 61% Drop In Profit
When Honda announced that it was taking a GM-built Ultium platform and dropping its own body on it and calling it the “Prologue,” I was intrigued. Two years ago, I even wrote a TMD titled “How Honda Could Be The Key To Electrification In The United States.”
My basic premise was that, other than Tesla, the main automakers selling halfway decent and affordable electric cars in the United States at the time were either Ford or GM, and there are a lot of people who just won’t buy American cars. Could a GM-built EV disguised as a Honda woo buyers, thus revealing a new group of buyers?
Here’s how I ended that article:
Given the current projections, it’s not likely that Honda will sell more than 50,000 of these in 2024, which puts it in the Mach-E territory. That’ll help juice the market, but it isn’t an overwhelming number. But if Honda can be a success with a perfectly fine EV I think it’ll show where the demand is. If it fails and spurs more hybrid growth, it’ll also show where the market is.
Whew, glad I had that caveat in there.
While I didn’t predict that a new administration would immediately kill the EV tax credits and remove CAFE penalties, it was always a possibility, and it’s impossible to know exactly what would have happened if the Inflation Reduction Act remained in place. That being said, I think that we’d arrive at the same destination, if not a little slower.
An interesting failure because, for a while, it was a sales success. It even outsold its cousin, the Blazer EV, for a time. In that sense, I do think my belief that there were buyers out there for a reasonably-priced Honda EV was correct. Well, at least, there were leasers, because the lease deals were excellent.
Some buyers were illogical enough to desire a Honda over a Chevy, even when they were fundamentally the same car. At the same time, some buyers were logical enough to score a sweet lease deal on a car with a Honda badge. Maybe some were illogical and logical at the same time.
A part of me thought that Honda’s move to utilize GM was a good way to get into the EV game without having to front a lot of development costs. Given what people knew at the time, it probably was. With full 20/20 hindsight, I’m not sure it was worth it.
Let’s start with the obvious thing, which is that the Prologue just wasn’t good enough to be a Honda. It was fine, but Hondas are better than fine, and it seems from forum posts and discussions with owners I know that the Prologue likely left a lot of owners underwhelmed. I don’t think it’ll be a huge reputation hit, but EV buyers tend to buy EVs again, and now Honda is in the awkward position of either not being able to sell Prologue owners another car if they like it or losing them to another brand if they hate it. Sure, there’s the Acura RSX eventually, but it’s not going to be here fast enough and probably not cheap enough.
And now, thanks to Honda’s latest financial reporting (the fiscal year Q3, but calendar year Q4), we know that the costs of electrification dragged the company’s profits down. Through three quarters, the company has lost $1.7 billion on electrification (which includes the Acura ZDX and other failed efforts). Overall, the automotive business is losing money. That’s not as large a hit compared to, say, Ford, but it’s not great.
And the costs aren’t just related to selling or leasing every one of these things at a loss. Honda cut back its orders as sales started to wane, and it sounds like there are some negotiations between the two companies as to how much Honda now owes GM, as Automotive News reports:
Honda expects additional EV charges pending the outcome of negotiations with General Motors on the winding down of their cooperation on EVs. The slow-selling Honda Prologue and Acura ZDX all-electric crossovers were jointly developed to ride on GM’s Ultium EV platform.
Honda reduced its procurement of the GM-produced vehicles and must compensate GM.
Honda has rolled out incentives to move the EVs, especially following the repeal of federal tax credits as demand plunged. Incentive spending on the Prologue climbed above $17,000 in January, according to data from Motor Intelligence. That compares with just $2,500 on the popular CR-V.
U.S. sales of the Prologue tumbled 86 percent to 2,641 in October-December.
A bunch of these are coming off lease in the next couple of years, and if you can support an EV with home charging, I bet they’ll end up being a good deal at least.
Is Japan Dragging Its Feet On US Investments?
If you’re like me, you’ve spent the last few days split between pretending to understand curling and watching the exit polls coming out of Japan. Assuming you haven’t been following both, it’s a great time to be an American, and it’s a great time to be Prime Minister Sanae Takaichi.
Takaichi called a snap election to try to bolster her support in the National Diet (the country’s legislative body) to address a host of issues. It wasn’t even close, as the PM is riding high following the successful-ish negotiation over tariffs with the United States. Part of that tariff deal involved Japan investing hundreds of billions of dollars over here, which, according to this Nikkei Asia article, isn’t happening fast enough for some people. And by some people, I mean President Trump.
His dissatisfaction stems from the delay in Japan’s plans to invest $550 billion in the U.S., a pledge made this past July in exchange for tariff reductions. Investments in three projects, including in gas power generation, are being negotiated, but no agreement has been reached.
Commerce Secretary Howard Lutnick, who led the tariff negotiations for the U.S., originally told Trump that the first project would be decided by the end of 2025. But with the total price tag expected to exceed 6 trillion yen ($38.5 billion), planning is taking time.
The target date was pushed back to the end of January, then again to the end of February. Trump is growing suspicious that Japan is intentionally dragging its feet.
The two countries are meeting next month to discuss all of this, so it’s possible that it’ll all get resolved. It’s hard to spend billions of dollars all at once. On the other hand, the Supreme Court might toss at least some of President Trump’s tariff powers, which would somewhat reduce his position.
BYD Sues Trump Administration Over Tariffs
To be fair, seemingly every company that has been impacted by tariffs has a lawsuit against the Trump Administration as a kind of placeholder in case the Supreme Court reverses any of them.
If the Supreme Court says that the President doesn’t have the power to impose tariffs on various countries, it’ll be a terrible day to cover the news. The reality is that, short of a complete invalidation of tariffs as a notion, there are many ways the White House can still put trade levies in place, and the Supreme Court is only reviewing part of the tariff-issuing power.
Still, it’ll be a hit, and the various impacted companies want to be in a position to get a refund. One of those companies is BYD, as Investor’s Business Daily reports:
Several of BYD’s U.S.-based subsidiaries, including those that make passenger cars, buses and EV batteries, filed a suit against the federal government’s sweeping tariff policy. President Donald Trump put the tariffs into effect last April.
BYD has a bus business in the United States, which includes a manufacturing facility in Lancaster, as well as a large battery presence.
Check Out This Sick Bathurst Ford Mustang
Ford is bringing the new Mustang GT3 to Mount Panorama for the Bathurst 12-Hour, and it looks dope as hell:
America’s Race Team will introduce its Ford Mustang GT3 to Mount Panorama and the Bathurst 12 Hour, February 13 – 15. The collaborative, factory-supported effort with Haupt Racing Team (HRT) is focused on a single pro-class entry for the SRO Intercontinental GT Challenge season opening round in Australia. Featured behind the wheel will be past event winners Christopher Mies and Dennis Olsen, as well as Repco Supercars Championship veteran Broc Feeney.
I was hanging out with Laurence, our resident Australian, as he helped David try to build a WWII Jeep in his backyard. While I didn’t help with the wrenching, Laurence did make me a sanga:
I feel like this qualifies me for the Bathurst 12-Hour.
What I’m Listening To While Writing TMD
Not everyone will accept this, but I think The B-52s might be my favorite punk band. You don’t think they’re punk? Just listen to “Strobe Light.”
The Big Question
What vehicle is most representative of the failure of mainstream automakers to build profitable EVs if not the Prologue?
Top graphic image: Honda; DepositPhotos.com
The small answer:
Ford Think
Chevy Spark
Ford Focus
Ford Ranger
If I were betting… the Prologue outselling the Chevy Blazer EV for a while is almost 100% “I would be willing to drive a Chevy EV, but I want CarPlay.” It’s more of an indictment of that one choice on Chevy’s part than anything at all on the Honda side.
The Honda Prologue is literally the Chevy Blazer EV for people who want CarPlay.
The bigger the hole: everyone worries more about how to fill the hole than if they were permitted to dig that hole in the first place.
Seems a terrible justification to let them keep digging if they weren’t, and all the reason to decide quickly.
How bout just pushing the hole diggers into the hole they dug, to help fill it in?
The Prologue is a Chevy that looks like a Hyundai.
Maybe when they are off lease and cheap, they seem inoffensive enough.
buddy just bought one off lease for less than 30 with 10k miles. It looks good in person
They seem to sell them at Costco. The blue is a nice color. Kinda big though.
Love the B-52s but I’ll be pedantic and call it surf/garage-influenced pop/punk.
Pretty good description.
Their 1st self-titled album is still my favorite. Rock Lobster and Planet Claire rock.
I wonder how many people are now picking up the new Passport over the Prologue. At least based off what I’ve been seeing around Upstate NY, the Passport seems to be super popular.
I had not thought of the B-52s as a punk band, but you are making a great case here.
They were very much so at first.
“I feel like this qualifies me for the Bathurst 12-Hour.”
Maybe the Bratwurst 12-Hour.
Is that how long it takes for a Brat to make it’s way through his body?
I think that’s the Sahlens 6 hours at Watkins Glen. However, Ketchup on a hotdog makes his qualifications suspect.
Is a hotdog a sandwich?
Biggest blunder was GM and the EV-1.
Yes. It falls under the sandwich category as a specialty sandwich, something that’s referred to by its identifying ingredient and the ‘sandwich’ part is dropped because it’s understood to be part of how it is served. See also – hamburger, lobster roll, hoagie/sub/grinder, tuna melt, etc.
Disagree, a hotdog is a taco.
A single “bread” wrapped around the filling would be equivalent to a single tortilla wrapped around a filling.
I’m pretty sure a taco is just a hamburger.
Expanding it out to “alternatives” as a whole, anyone still putting money into hydrogen.
And Laurence’s hot dog beats the Tesla Cafe one.
I would argue the F150 Lightning is a bigger failure than the Prologue.
Ford pickups have been massive sellers over the past few decades. While pickup truck buyers are less interested in EVs than buyers of other segments, it seems like an EV version of an extremely popular conventional pickup truck could have sold reasonably well. Yet it sold in small numbers, lost a ton of money, and is cancelled after only a few years.
An argument could be made that the Lightning failed since it wasn’t great at Truck Stuff (i.e. towing and hauling). However, most buyers are using F150s as family/commuter vehicles with only occasional light towing/hauling, so the Lightning probably meets the needs of most of its target customers. Plus, it is quieter and far cheaper to run than ICE versions, so in some ways it is a superior to ICE trucks for how they are actually used.
Ford managed to create a reasonable well-executed, semi-sensibly priced EV version of one of the most popular vehicles in the US, yet it flopped yard. While it might have been more popular than the Prologue, I think that makes it a bigger failure.
The biggest problem is that it makes it obvious that it doesn’t do that Truck Stuff, in a way that makes it look like you bought it to pretend you do.
Or worse yet makes people mistake you for a truck owner.
Great take. Your note about how people actually use trucks is spot on. I have a friend with a Lightning and he uses it to commute, but needs the bed 1% of the time and it’s perfect for that. Much more efficient on the commute (still a silly vehicle for that, but if you can only have one car/truck it’s a compromise), and works very well as a truck for most things but towing.
I was going to say the Lightning as well, and your summary does an excellent job of covering why. GM learned from the Lightning and did better (aside from perhaps styling) with the Silverado and Sierra EV, but even still those things aren’t exactly selling like hot cakes.
The problem with the lightening as a car scenario is that is doesn’t fit into car sized parking spots, unless you’re sort of an asshole. The sort of an asshole demographic doesn’t much like EVs, and judging by the number of lifted trucks with low sidewall tires, utility is not an issue either.
So a truck that doesn’t appeal to truck buyers, an EV that doesn’t appeal to EV buyers, and make it uselessly larger than what the overlapping part of the Venn diagram wants.
An EV Maverick probably would have sold.
The only thing the lightening had going for it was that it was very low effort put the drivetrain between the frame rails of a full size crew cab.
An EV Maverick would have been great, and might have sold better, although you still have the “I need a truck for…” aspect. But as the 1 vehicle replacement, it would be amazing.
Perhaps the Telo Truck will fill the gap?
Or the slate.
Really the gap between an old style Toyota hilux , and a rental flatbed or 20 foot box truck is rarely filled in my experience.
I see a trend in these comments on EV flops of the vehicles being a flop not because of the vehicle itself, but because of human behavior and politics.
TBQ: I’d argue it was the Jaguar I-Pace. As far as EV’s go it was rather good, and as far as Jags go it was great, however they barely sold any outside of Waymo it seems, and they didn’t have much else on offer that was ICE based either.
Some customers chose the Prologue over the Chevy because of Apple CarPlay. I will say that there’s something about the Prologue that always catches my eye. The Honda lettering? The colors? I can’t tell the different Chevys apart.
Leasing is the way to go with EVs, except for maybe Tesla.
People underestimate how important CarPlay is for a massive segment of the car-buying public. That, and ease of ingress/egress are probably the two most important things.
You could also get a Prologue for cheaper than a Blazer EV and not much more than a Equinox EV. It was just a better deal when you look at out the door pricing.
I will actually say that I think the Prologue was ultimately a success for Honda – I don’t have proof of anything I’m saying, but my honest belief is that it was really only intended as a feeler to see how Honda’s dealers and notoriously conservative base would react to an EV. I highly doubt they ever expected it to be profitable, and I’ve said so for a while.
I have a hunch that the lukewarm reception means we probably won’t be seeing the 0 series in the US now, at least not in the immediate future.
I agree, I think it was always more of a stopgap to get some EV intenders in the fold so that in a couple years time, they could flip them into a truer Honda/Acura product.
General Motor’s EV-1 tale is the definitive American electric vehicle blunder.
An iconic American company being decades ahead of the current thought on the idea.
Throwing its engineering might at the issue, coming up with a pretty great for the time idea that could have been a quantum leap for the idea of how people used cars and different fuels to get around America, right at a time when the gas guzzling SUV became en vogue.
then
completely hamstringing the idea for many classic (stupid) American reasons, setting the EV industry back 30 years.
I’m going with the EV-1.
The B-52’s are great. I was fortunate to have been the backstage security supervisor on the Houston stop for the World Tour 90 presentation. They were super nice.
Do we have an estimated completion date for the World War Two jeep?
It’s gonna be done soon! Hopefully, “done” in that it runs and drives in a couple of weeks? Maybe? I hope?
BusyForks/Solterra???
It was such a hilariously bad self own. Released years and years after Model Y/3. Yet somehow it wasn’t even competitive with a Mach-e or ID.4. It felt like Toyota was benchmarking the wrong cars and instead of chasing a true volume seller that sold itself on its own merits they were just credit-chasing.
I think what we’ve learned over the past couple of years is that BEV’s remain niche. I have a feeling that they will continue to slowly gain market share for a few years before mainstream adoption is acheived.
Honestly, I think Toyota read the market the best as they have one of the widest lineups of HEVs with a few PHEVs thrown in and most of them are complete sales juggernauts in their respective segments. GM, Ford and Stellantis really missed the boat by not hybridizing their own juggernauts.
Well, it’s more of a situation where a regime change led to the government trying to kill EVs on the one hand, and promote fossil fuel consumption at all costs.
As for reading the market, “hydrogen”
You’re not wrong. I’m not sure who the Mirai was built for.
Hydrogen is a really, really interesting fuel. It’s energy-dense and abundant on our planet. The real bugaboo about hydrogen is that it is quite expensive to extract, compress and store the resulting gas.
Not only that, but it’s a chicken or the egg scenario. Only Toyota was willing to give it a go in the marketplace, but was done under the assumption that energy companies would build out a fueling network. When the industry took a pass on building out hydrogen infrastructure, it was a shot across the bow for Toyota. Sure, Shell did dip their fingers in the water and built a few hydrogen stations, but they weren’t profitable, and of the few smaller players who took a leap, many shut their stations to pivot elsewhere or simply died on the vine.
I think that Toyota did learn their lesson, and the Mirai is one of the reasons why they didn’t go all-in on BEV electrification plans as they understood the market’s hesitancy to go from gas to full electric overnight. They’ve also been expanding their PHEV lineup as more consumers are willing to top off their vehicles overnight to avoid using gas for the next day’s commute and the sales numbers speak for themselves.
What gets me is the initial recall on the wheels falling off due to the lug bolts. Of all the things Toyota should already have solved keeping the wheels on should be one of them. I really feel that the entire Busyforks production was only done reluctantly and thus, half vast.
I hate Ford claiming that they are “America’s Race Team”
“America’s Recall Team”