Honda Abandons Its EV Target — Should You Care?
Honda posted its first-ever loss and scrapped its EV targets, pivoting hard to hybrids. Here's what that shift means if you're weighing a novated lease in 2026.
Honda has posted its first-ever corporate loss and officially walked away from its previous EV sales targets, citing pressure from US tariffs and Chinese EV competitors (The Driven, May 2026). The headline news is a revamped Prelude, repositioned as a hybrid — not the battery-electric future Honda was promising just a couple of years ago.
This isn't a minor course correction. Honda is one of the world's largest automakers, and when a company of that scale does a public U-turn, it reshapes what ends up on Australian dealer forecourts — and therefore what's available to salary-package employees shopping for their next novated lease vehicle.
What this means for novated lease customers
The practical impact splits into two camps: hybrid shoppers and EV shoppers.
If you're leaning toward a plug-in hybrid (PHEV) or conventional hybrid, Honda's pivot could actually widen your options over the next 12–24 months. More hybrid stock, potentially more competitive pricing, and a revived Prelude nameplate on the horizon. Hybrids don't attract the same FBT exemption that eligible battery-electric vehicles currently enjoy under Australian tax rules — so the after-tax cost comparison between a hybrid and a full BEV remains worth modelling carefully before you sign anything.
If you had a fully electric Honda on your wishlist, the timeline just got murkier. Honda's retreat doesn't kill EV novated leasing — there are plenty of other brands still expanding their BEV ranges in Australia — but it does reduce one competitive thread. The FBT exemption for eligible zero-emission vehicles remains in place under current Australian law, and that advantage still makes a battery-electric vehicle worth serious consideration for PAYG employees, regardless of what Honda decides to build.
Common questions
Does Honda's EV retreat affect the FBT exemption for electric vehicles in Australia?
No. The FBT exemption for eligible zero-emission vehicles is a matter of Australian tax law, not manufacturer strategy. Honda's internal decisions have no bearing on whether your novated lease qualifies — what matters is the vehicle meeting the eligibility criteria set by the ATO.
Can I still novated lease a Honda hybrid in 2026?
Yes. Hybrids are leasable under a novated arrangement. They don't attract the FBT exemption that battery-electric vehicles currently enjoy, but they can still deliver meaningful pre-tax benefits through the novated lease structure. The right choice depends on your specific usage and tax situation.
Is the new Honda Prelude hybrid available for novated leasing?
As of mid-2026, the revamped Prelude hybrid is still being released internationally. Once it reaches Australian dealers with a confirmed price and compliance, it would generally be eligible for a novated lease like any other passenger vehicle. Check with millarX once local pricing is confirmed.
Should I wait for more EV options or lease a hybrid now?
That depends on how long you're prepared to wait and what your current vehicle situation looks like. EVs with FBT exemption eligibility offer a structural tax advantage that hybrids currently don't match. If there's an eligible EV that suits your needs today, waiting for a Honda EV that may be years away probably doesn't make financial sense.
Does Honda's loss signal broader trouble for EVs in Australia?
Not necessarily. Honda's problems are partly specific to its own late and underfunded EV push, and partly geopolitical (US tariffs, Chinese competition). Other manufacturers — particularly Korean and Chinese brands — are still actively expanding EV availability in Australia.