Subaru is the latest brand to announce it will reduce its electric vehicle (EV) investment, instead shifting attention to expanding its hybrid development, citing diminishing demand for EVs.
At a recent earnings call, as reported by financial outlet Nikkei Asia, Subaru president Atsushi Osaki said his company would reconsider the ¥1.5 trillion (~A$14.86 billion) it had committed to invest in future electrification – despite having already invested ¥300 billion (~A$2.98 billion).
“Given the increasing demand for hybrids and the reappraisal of internal combustion engines, it is appropriate to delay the timing of full-scale EV mass production investment,” Osaki-san said.
Subaru’s investment had facilitated plans to offer eight EVs globally by 2028. Its original plan of offering four Toyota-based EVs by the end of 2026 will still go ahead, but the arrival of future models – including any intended to be developed in-house by Subaru – will likely be pushed back.
Importantly, Osaki-san outlined that the original amount invested wouldn’t be reduced, but rather reallocated as a growth investment. Exact details of this reallocation are yet to be disclosed.
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Alongside declining EV demand, Subaru has also been forced to change course due to changes in government incentives, particularly in the United States, where it records more than 70 per cent of its global sales.
On September 30, 2025, the Trump administration ended incentives of up to US$7500 towards EV purchases, a move that has also affected the plans of other Japanese manufacturers.
Toyota, for example, announced in early November that it would postpone plans to build an EV plant in Japan’s Fukuoka prefecture in 2028, according to Nikkei Asia.
This was the second time the plant was postponed, as a claimed decline in EV demand forced Toyota to delay it in March this year. Nissan also abandoned plans for an EV battery factory in Fukuoka in May, amid profitability concerns and financial difficulties.
As for Subaru, cited shifts in EV demand led to the announcement that it would tool one of its largest Japanese plants to produce petrol, hybrid, and electric vehicles on the same production line, allowing for flexibility in response to market demand.
“We will expand our product lineup to meet diverse needs,” Osaki-san said, indicating that new future models will offer hybrid or internal combustion power instead of being dedicated EVs.
Subaru has also previously outlined its commitment to internal combustion power for as long as possible. It’s part of a three-way agreement with Toyota and Mazda to advance the development of lower-emissions engines that lean on hybridisation and the use of synthetic fuels, and recent concepts like the Performance-B STI hint at an appetite for internal combustion.
Additionally, Subaru’s latest hybrid models have leveraged Toyota technology. The new Forester Hybrid utilises such tech to improve capability and performance from the electric portion of its drivetrain, while a similar setup has also been fitted to the updated Crosstrek Hybrid overseas.
The previous generation of Subaru’s mild-hybrid-like tech is still available in the Impreza hatch and Rex light SUV in Japan. As for EVs, Subaru’s only current model is the Solterra, but it’ll be joined by the Trailseeker, Uncharted, and one more as-yet-unknown model shared with Toyota before the end of 2026.
Subaru is just one in a long line of brands to dial back EV ambitions, even though it was relatively slow to the electric game.
Earlier this year, fellow Japanese manufacturer Honda cut its EV development budget by 30 per cent, while Volkswagen briefly paused EV production to meet slower than expected sales growth.
The trend has continued to the higher end of the market, too. Porsche has revised its EV plans to incorporate more combustion models, and Volvo has canned its plan to be EV-only by 2030, as has rival brand Genesis.
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