Subaru rethinks EV strategy

SUBARU is reassessing its electric vehicle strategy amid collapsing profits, slowing EV demand and mounting tariff pressure, while simultaneously cutting Australian pricing on key battery-electric models in a bid to stimulate demand.

The Japanese car-maker has delayed plans to begin production of its first independently developed EV at its new Oizumi plant in Japan and is instead prioritising hybrid and internal combustion models when the facility opens around 2028.

The strategic pivot comes as Subaru booked a ¥57.8 billion ($A503m) EV-related impairment charge and reported a dramatic 90 per cent collapse in operating profit for the financial year ended 31 March.

Operating profit fell from ¥405.3 billion ($A3.5b) to just ¥40.1 billion($A352m), with US tariffs alone costing the company ¥226.9 billion ($A1.95b).

Subaru CEO Atsushi Osaki said slowing EV uptake in the company’s key US market had forced a broader strategic rethink.

“In the US, our key market, the pace of BEV adoption has slowed,” he said.

Subaru had planned for Oizumi to become the cornerstone of its independent EV manufacturing strategy, but that timetable is now uncertain.

The company says it will continue developing core EV technologies but significantly reduce resource allocation until market conditions improve.

Subaru’s current EV strategy remains heavily reliant on its alliance with Toyota.

Existing and upcoming EV models including the Solterra, Uncharted, and Trailseeker all share architecture or development links with Toyota ‘bZ’ (or Beyond Zero) products.

While Subaru’s EV registrations in the US have improved, incentive spending remains unusually high for the traditionally low-discount brand.

Locally, Subaru Australia has responded with immediate price reductions across its MY26 electric SUV range.

The cuts affect both the Solterra and new Trailseeker line-ups.

The most significant reductions apply to the Trailseeker, with pricing cut by up to $4000.

Subaru Australia said the move reflects a desire to maintain competitive positioning without compromising value.

Subaru’s recalibration mirrors a broader industry trend as automakers scale back ambitious EV timelines in response to softer-than-expected consumer demand.

Manufacturers including Honda, General Motors, and Stellantis have all recently adjusted electrification plans.

Subaru now appear increasingly focused on hybrids that are central to its medium-term strategy, particularly in North America where environmental policy shifts and demand uncertainty are complicating EV adoption forecasts.

Despite the sharp profit downturn, Subaru expects profitability to rebound in the current financial year.

The company forecasts operating profit rising to ¥150 billion ($A1.3b), with global sales increasing to 940,000 vehicles.

North America remains critical, accounting for more than 70 per cent of Subaru’s global sales.

The result underlines how exposed Subaru remains to shifts in US trade policy and consumer demand – particularly as it attempts to balance electrification investment with the realities of a slower-than-expected EV transition.