Honda presented its updated financial case this morning, and the news was mixed. The company’s revenue was given a Mike Tyson blow to the face by both the money it seemingly misspent on electric cars and by tariffs. What’s the positive here? The new tariff deal should make things a lot better for the company in the second half of the year.
I don’t want The Morning Dump to be all-tariffs, all the-time. Whether it’s a bug or a feature, I’m not sure, but it feels like none of this is really settled, and that means anyone can Rorschach (the test, not the character) their views on the deal. For instance, the President seems to think that Ford will be selling F-150s in Japan and, well, it’s not clear that anyone else thinks that’ll happen. There’s a risk as a journalist of being like a player on the Washington Generals, forever distracted by nonsense and therefore missing the basketball stuffed under the shirt of a Harlem Globetrotter. I’m going to try to keep my eye on the ball here.
The EV environment is not what was predicted in the past, so it’s not a big surprise that Genesis appears to be cutting one of its more interesting/confusing vehicles from the lineup. And speaking of cuts, I totally forgot that a few automakers have specific deals with California that are outside the scope of the recent emissions cuts.
Let’s play.
Honda Says EV-Related Misadventures Cost It $780 Million
Could Honda have been Tesla? Could it have done what Tesla did? Technically, yes. There is no secret technology so wild or unusual that Honda or any other car company was unable to do it. This is really a four-minute mile issue. People assumed the technology didn’t exist, the market wasn’t there, and the profits were basically impossible.
Then Tesla pulled a Roger Bannister, and everyone realized it was actually doable. The problem for everyone who isn’t Tesla, though, is money. Tesla was pre-revenue for the longest time, relied on huge amounts of government help, and the buzz helped sustain enormous valuations that generated cash for the automaker. Making good electric cars has, and will be, replicable. Doing it at the margins and scale Tesla was doing it is a lot harder.
To stretch this metaphor a bit, Tesla broke the four-minute mile on a perfectly clear track. Everyone else is suddenly trying to break the barrier on a track filled with hurdles, one of which has been the success of Tesla. Honda has tried many Honda-like approaches to this problem, including building locally in China and partnering with General Motors, and basically none of it has worked. It has a deal with Sony to build a car, the Afeela 1, and I-a-feela like it’s going to be a disappointment.
Honda admitted as much in its recent financial release and in a press conference, as chronicled by Hans Greimel at Automotive News:
In announcing the financial results Aug. 6, Managing Executive Officer Eiji Fujimura blamed the added EV costs on Honda’s conservative outlook for EVs. The company has delayed product development and investment in a Canada EV production hub as it readies its new 0 Series of EVs.
“We are not very optimistic, to put it plainly,” Fujimura said.
[…]
Honda’s new EVs for China were too expensive for the market amid ongoing price wars there, and they lacked the smart-car user interface and connectivity demanded by Chinese consumers, Fujimura said.
“We are struggling with EVs there,” he said. “We are underachieving against the initial plan.”
In the United States, Honda might be temporarily doomed by its own success. The GM-based/built Honda Prologue is a bit of a sales hit, even with some teething issues, but it’s also a revenue hit. In that same article, Greimel quotes data from Motor Intelligence that shows the company is spending, on average, more than $12,000 in incentives to move Prologues and a whopping $21,000 per Acura ZDX. This is consistent with what my friends are telling me. A friend asked for a good deal on an EV, and I told them to lease a Prologue, which they did, and another friend picked up a ZDX. Neither spent a lot of money.
A high-spec ZDX Type S theoretically costs $76,755, which is money that no sane person would pay for it. If you add the $7,500 tax credit to $21,000 in incentives, you’d have almost $30,000 off, bringing the leased price closer to $45,000, which is a little more reasonable. By comparison, the also-good Blazer SS is mostly the same car, but is $10,000 cheaper when compared spec-to-spec.
Honda is in the position where it’s losing a lot of money every time it sells one of these cars, and that’s before the $7,500 disappears in a few weeks. It’s a rough situation.
So where’s the silver lining? The US-Japan trade deal will lower tariffs on Japanese imports to just 15%, so the automaker can probably absorb more of those costs. Last quarter, trade barriers cost the company $861 million, roughly, but this year overall, the company says it’ll just be $3.1 billion. While that’s a lot of money, it’s $1.5 billion less than the original expectation.
This does assume the trade deal goes on as expected, and there’s a reason not to expect that.
The President Thinks Japan Will Be Buying F-150s
Here is something the President of the United States and I agree on: The Ford F-150 is a great truck. It’s great! There is nothing wrong with an F-150 and, I hate to say it, but I’d probably sell my awesome E39 if just the right F-150 came my way (see if you can guess my perfect spec). Where we disagree, though, is on the idea that the F-150 will be a hit in Japan.
The main problem with all of the President’s “deals” is that these things should, by their very nature, take like a year to pull together and not weeks. They do not seem to be actual plans that are fully written down anywhere, and the details are incredibly vague. The President could be playing nine-dimensional chess, but given what I’ve seen from the trade negotiations so far, it’s more likely the administration is playing the shape-sorter game and keeps trying to shove the same star-shaped plastic block into their own throat every time.
Anyway, read this from Bloomberg:
“They’re taking our cars,” Trump said of Japan in a phone interview broadcast by CNBC on Tuesday. “They’re taking the very beautiful Ford F-150, which does very well. And I’m sure we’ll do very well there and other things that do very well here, will also do well there.”
Are they, though? Is that a thing that will really happen? Does he really believe this? Here’s more from Bloomberg:
While Trump has long lamented the fact that US cars are unpopular in Japan, most experts agree that is due to the lack of vehicles suitable for the market, rather than any barriers to trade.
The Ford F-150 that Trump mentioned in the interview is more than two meters wide even without mirrors, likely limiting its usefulness on Japan’s roads, many of which are less than four meters wide for two car lanes, according to government data released in 2012. Around half of Japan’s households own a smaller class of car that’s less than 1.5 meters wide, to better navigate narrower roads.
Japan has amazing car enthusiasts who actually love American cars and make American cars work on the country’s narrow roads. Please see this great article by our friend Sam Smith about dajiban if you don’t think there’s someone in Japan who would buy an F-150. I know that the F-150 Raptor is an absolutely dope-as-hell truck for a certain kind of Japanese gearhead, and I hope that Ford is working on a way to make that happen. But will the F-150 be purchased in high enough volumes to make the retrofits worthwhile? I don’t see it.
I Am Sad I Never Got To Drive The Genesis G80 Electrified
I was a big fan of the Genesis G90 when I got to drive it. While it doesn’t do all the things a Bentley or Rolls-Royce will do, it will do enough of them at such a significant fraction of the price that it’s probably the luxobarge I’d personally buy. I think it’s cooler to show up in the big South Korean flagship than, like, a Ghost.
What I never got to drive was the ginormous fully-electric G80 Electrified, though I hear it was good. It’s also going away, according to InsideEVs:
Recently, an eagle-eyed Twitter user noticed something while browsing the brand’s website. The G80 Electrified had disappeared from Genesis’s lineup, with no announcement. Had Genesis quietly canceled the G80 Electrified?
Well, after reaching out to Genesis, the answer is yes. The G80 Electrified is gone for the 2025 model year.
“The customer is at the core of every decision we make, and we remain flexible as we adapt to ever-changing consumer needs and market conditions,” said Jarred Pellat, senior PR manager of Genesis North America. If you’re in search of a fully electric Genesis, the brand will be happy to sell you the GV60 or GV70 Electrified.
Is this a sleeper pick for a great used luxury car? Maybe!
Stellantis Might Have Shot Itself In The Foot With This One
Every day, I learn something new about how the rollback of environmental regulations impacts the market, and today what I learned is that all those deals some automakers struck with California are still in play through at least this year, and for Stellantis, probably longer than that.
Most of this doesn’t really impact the automakers (Volvo, Honda, BMW, VW, Ford) involved because it only goes through the next model year, and those plans were long ago made. Stellantis, though, is in a different situation. You’ll remember the State of California and Stellantis were locked in a prolonged battle over what the company could or could not sell there, and elsewhere. Sensing that the whole world was going to be more EV-friendly, Stellantis cut a deal that, in retrospect, doesn’t look that great.
Here’s how Automotive News sums it up:
For the 2028-30 model years, Stellantis is also obliged meet ZEV sales requirements. However, the company and the state “shall in good faith confer” no earlier than Jan. 1, 2026, to agree on the requirements, considering in part “the extent to which Stellantis would be harmed, relative to other manufacturers, if Stellantis is restricted, in whole or in part,” by its commitments, the agreement says.
Stellantis also committed to “put forth its best efforts to sell as many ZEVs as reasonably possible” in participating states outside California through the 2030 model year.
“There’s a little bit of mitigation of the scope” of Stellantis’ agreement, “but it’s still not an insignificant requirement for them,” Burns said.
Jodi Tinson, a Stellantis spokesperson, declined to answer specific questions about the extent to which the company has concerns about its obligations and said only that the company “continues to honor its agreement with CARB.”
How much is “good faith” worth these days?
What I’m Listening To While Writing TMD
Here’s Clipse with “M.T.B.T.T.F.” and the excellent question: What’s a Testarossa if you don’t test’em?
The Big Question
What cars should we send to Japanese enthusiasts, and what do we want back in return?
Top photo: Acura
We will be very gracious and let Japan buy Faraday Future. Not the cars, just the whole company, and please make it go away.
Considering they have been on sale for less than 18 months and how many I have been seeing around is it possible Honda doesn’t need to be spending $12,000 per Prologue? I feel like I see two-three times as many Prologues as the bz4x/soltera siblings which have been on sale much longer.
I understand manufacturers will sometimes pursue market share over profitability but perhaps they are overshooting on how much incentive these actually need.
Wouldn’t $12k be pretty close to the money that they have to pay GM? They probably will be able to recoup some of these development costs in a future model where they are packing their own battery cells.
I think you’re seeing them because of the incentives. The lease is cheap and thats the only reason people are buying them.
Right, but if they are complaining in quarterly earnings reports about losing money on every one they sell maybe the balance is off and they should be incentivizing less and selling fewer.
I am sure the international auto industry is very intertwined with a ton of non-aligned incentives but I don’t understand the strategy of taking a loss to build market share for a company that isn’t essentially a startup. There’s the joke that is about 200 years old about selling each item for a loss but making up for it in volume but I don’t expect Honda to use that strategy.
Ok we give you the F150, you give us the Land Cruiser 70 with the turbo diesel.
Just… no.
While I overall agree completely, I do feel the plastic block in this analogy would be more of a mushroom shape.
Quick reminder that no company is going to absorb tariff costs long term. They might for a little while to avoid spooking customers, but eventually all of that 15% (and maybe a little more, because using the government as a scapegoat for higher prices is always a winning strategy) will be passed along to us.
Also worth noting that to date, I have not heard of a single actual signed trade deal. There are some handshake agreements, but nobody has put pen to paper as yet. And as Matt pointed out, there are very valid reasons to believe some of these announced deals will never happen, or at least will not happen in the form they were announced. I suspect a lot of this is theatre to keep Trump distracted until he can be removed from office.
I’ve been getting the feeling lately that if the democrats can get their act together enough to win some midterms, the Republicans may “find religion” and be inclined to cut their losses and turn on Trump if they think it might make a difference in 2028…there being no honor among thieves and all that. The Republicans have been suspiciously quiet about letting him dig this tariffs hole.
I suspect even a signed deal won’t matter to this crew. Why bother if every week? a new shiny object distracts.
Never ascribe any level of “dimensional chess” to a president that probably couldn’t play regular chess. The fact that you could likely fit a kei car into the bed of an F-150 makes this latest daily delusion somewhat hilarious.
Years ago I spent 6 weeks in Japan over the summer for work. I remember seeing a guy driving through the town I was staying at in a ’90s era Chevy dually pickup that was slammed as well. It was certainly a choice and I can only imagine the routes he had to take to manage that beast on roads that would be considered one way streets here.
EDIT: That Sam Smith article about Dajiban was delightful and makes me miss Japan even more.
Honda with their current wanderings is just another thing that baffles me. Seems like if they just took the hybrid setup in the Accord/CRV, and added more battery for a PHEV/EREV, and put it in everything from said Accord/CRV to the Pilot/Odyssey/Ridgeline platform, that would be way more successful than rebadging Chevy’s and such. Just continue to make the straightforward vehicles people like from them, and add some decent electrification in the simplest way possible.
This. I would buy a hybrid Highlander/Pilot/Tulluride in a heartbeat. Tuned for economy, not power.
Which makes sense – at least in CARB states as each EV sold earns 4 ZEV credits – worth $5,000 each. Then there are the GHG credits.
How very ‘center of the universe American’ of us to assume every country has the same space and tastes as we do. Not that I expect a sitting president to employ that type of logic.
Not that I expect THIS sitting president to employ that type of logic.
Fixed it for you
That’s what I meant. He sits a lot due to those cankles. 🙂
The G80 was a fan-fucking-tastic car to drive when I test drove one. A thing that I particularly liked was that it had a knobby thing you could use to drive the infotainment system, instead of poking at the screen (which you could also do). It rode really well, the seats were comfy, the interior was suitably luxe, and in fast mode, it had proper thrust. I would have bought a very gently used livery one a couple of weeks ago if the insurance on them wasn’t literally double what I’m paying now. I just couldn’t justify that. But I REALLY wanted to.
My God have none of these yahoos figured out triangular trade at it’s most basic.
Lincoln should bring back the special edition 2019+ Continentals that had the rear suicide doors. All of these should be sold only in black with deeply tinted windows. I could see these being very popular with the yakuza.
Amazing Silicon Valley reference. Russ Hanneman is one of the most insane characters on the show and that’s saying something. “Tres Commas”
I don’t know if they fit the bill, maybe not, but I think the best American-made options to sell to Japan would be Subarus and Toyotas and Hondas that are made in the USA.
“I-a-feela like it’s going to be a disappointment.” -This is why I subscribe.
What cars should we send to Japanese enthusiasts, and what do we want back in return?
I think the Maverick would do well as a step up in comforts from the utility version of the Hilux, but smaller than the larger Tacoma/Hilux.
I just want Honda to make a new Element as an EV or PHEV. Give it the same personality and fun interior as the “e” hatchback they made for a few markets, but in a bit larger and boxy package with extra range.
Subaru enthusiasts have been clamoring for them to bring over the Levorg as a revived WRX wagon.
Honda S660, Honda Fit RS, and any kei-class utility truck.