Honda Targets $9.4 Billion in Cost Cuts as China EV Competition Intensifies

Honda Motor is targeting more than $9 billion in cost reductions over the next four years as the Japanese automaker pressures suppliers to lower prices amid intensifying competition from Chinese electric vehicle makers.

According to internal company documents reviewed by Reuters and people familiar with the matter, Honda aims to save 1.5 trillion yen ($9.4 billion) by 2030. The strategy highlights mounting pressure on Japanese automakers as Chinese rivals such as BYD expand across Southeast Asia, Latin America and Europe with competitively priced EVs, advanced batteries and software.

Honda, also the world's largest motorcycle manufacturer, is working to revive its struggling automobile business. The company expects cumulative EV-related losses to eventually exceed $12 billion and has shifted more attention toward gasoline-electric hybrid vehicles. In May, Honda reported its first annual loss since becoming a publicly traded company.

Honda declined to confirm specific cost-cutting targets or details of supplier negotiations. However, a company spokesperson said the automaker is working with suppliers worldwide to improve competitiveness, including by increasing the use of standardized components.

Earlier this year, Honda executives met major suppliers in Utsunomiya, Japan, where they outlined plans to reduce expenses and potentially source more components from Chinese manufacturers. Suppliers were subsequently given individual cost-reduction targets.

Internal documents show Honda is seeking cost cuts of around 30% across three major categories: pressed and forged components, electrical parts and technology used in software-defined vehicles. Tier-one suppliers have also been encouraged to reconsider material procurement and increase their use of standardized components from lower-tier suppliers.

Honda has additionally asked suppliers to use more Chinese-made components where practical. One source described the targets as "extremely large" and questioned whether they could be fully achieved.

The cost-cutting push comes as Honda deepens cooperation with Nissan. The two companies said Monday they will jointly develop standardized electronic control units for software-defined vehicles, targeting deployment from the 2029 financial year.

Honda faces pressure not only from Chinese EV competitors but also from U.S. import tariffs, rising labor costs and growing research and development spending as vehicles become increasingly software-driven and technologically complex.