The electric SUV revolution seems to have quietly slipped into neutral. Just a few short years ago, automotive giants raced headlong into electrifying their larger vehicles, imagining a brave new world powered exclusively by batteries. But now, many are tapping the brakes—hard.
Honda recently announced the cancellation of its anticipated three-row electric SUV, dubbed the Concept 0, originally slated for a 2027 release. The Japanese automaker pointed directly at sluggish demand in the U.S. market, coupled with the looming end of the crucial $7,500 federal EV tax credit. In response, Honda is redirecting nearly $20 billion from its EV plans towards hybrid technologies. Clearly, the road to full electrification isn't as smooth as some hoped.
This hesitation isn't isolated. Lotus, Porsche, Nissan, Mini, and Volvo have all quietly slowed their EV ambitions or reshuffled investments towards hybrid and conventional fuel models. Even Ferrari, Lamborghini, Mercedes-Benz, BMW, and Audi, champions of luxury and innovation, have hit pause or scaled back electric SUV development. Porsche notably delayed its electric Macan due to unexpected technical challenges and soaring costs.
Consumers, it seems, are also not entirely sold on electric SUVs—especially the pricier ones. In Australia, Kia's seven-seat EV9 found only 165 buyers over several months, dwarfed by its gasoline-powered sibling, the Sorento, which moved over 5,000 units. Similarly, the luxury Mercedes EQS SUV trails its internal combustion counterpart by a margin of 25 to 1, suggesting buyers aren’t yet convinced that battery power justifies premium prices.
Indeed, sticker shock remains a major issue. The average price for electric vehicles in the U.S. hovers around $58,000, with high-end electric SUVs frequently breaching the $100,000 mark. This pricing barrier deters mainstream consumers who simply cannot justify paying a significant premium, especially when cheaper, dependable gasoline alternatives remain widely available.
The problems don't end there. Software glitches and charging infrastructure shortcomings have further dampened consumer enthusiasm. General Motors temporarily halted production of its Chevrolet Blazer EV due to persistent software bugs and charging inconsistencies, casting doubt on the reliability of next-generation EVs. Meanwhile, charging networks, crucial for convincing drivers to embrace battery power, continue to lag behind vehicle production, leaving many potential buyers anxious about range and practicality.
Adding urgency, the critical $7,500 U.S. federal EV tax incentive is set to expire at the end of September 2025. Industry analysts predict a significant drop—upwards of 27%—in EV sales once this incentive vanishes unless automakers drastically cut prices to compensate. Some companies, like Tesla and GM, have already begun aggressively discounting certain models, but sustaining profitability under these conditions remains a significant challenge.
Automakers aren't sitting idly by, though. There's been a notable shift back toward hybrids as a pragmatic compromise. Brands like Toyota, Honda, and Ford increasingly highlight their hybrid lineups as practical, realistic solutions that bridge the gap between traditional combustion vehicles and fully electric models. This strategic pivot reflects a market that, while interested in electrification, isn't ready to fully commit due to ongoing practical hurdles.
Interestingly, the global outlook remains mixed. While the U.S. and Europe reconsider their ambitious EV SUV plans, China powers ahead. Chinese consumers and domestic manufacturers such as BYD and Xiaomi embrace electric vehicles wholeheartedly, thanks largely to lower prices, better infrastructure, and appealing features. With over half of new vehicle sales in China now electric, Western manufacturers face increased pressure to find a balance between innovation and affordability to remain competitive.
Ultimately, the electric SUV's retreat isn't necessarily a failure but rather a recalibration of expectations and strategy. Automakers now seem more inclined to refine and consolidate their electric offerings, prioritizing affordability, practicality, and reliability over flashy, high-priced flagship models. For consumers, this shift means the EV market may soon deliver more reasonably priced options without sacrificing functionality.
Until then, consumers seeking the benefits of electrification might find hybrids the best choice, providing an appealing balance between efficiency, affordability, and everyday usability. The electric SUV dream isn't dead, but it has certainly become more selective, pragmatic, and perhaps a bit less flashy than initially imagined.