Subaru said it is re-evaluating its electric vehicle (EV) investment plans amid a rapidly changing market environment, slowing global sales, and the prospect of multi-billion-dollar costs from newly proposed U.S. auto tariffs.
The Japanese automaker joins a growing list of domestic peers, including Nissan, Honda, and Toyota, that have recently adjusted their EV strategies. Subaru’s announcement came as it released its fiscal year results, showing a 4.1% decline in global sales to 936,000 units, including a similar drop in North American deliveries.
“We are re-evaluating our plans, including the timing of investments,” said CEO Atsushi Osaki. He pointed to “today’s rapidly changing environment” and other external pressures, such as evolving U.S. trade policy.
The automaker warned that proposed tariffs by the Trump administration on imported vehicles could cost the company as much as $2.5 billion this year. With the United States accounting for roughly half of its global sales, Subaru is exploring ways to expand local manufacturing to offset the potential financial impact.
“Under the current circumstances, there is probably no way not to expand in the U.S.,” said Tomoaki Emori, Subaru’s senior managing executive officer. “We must think about how to go about that.”
Emori added that Subaru still has the production capacity to respond and said, “We would like to mitigate the impact of tariffs while making use of it.”
As part of its long-term strategy, Subaru is preparing to produce EV batteries at its Yajima plant in Japan. However, executives signaled that future production could include a broader mix of powertrains, including hybrids and plug-in hybrids.
“It is becoming more difficult to decide how to incorporate electrification into our production mix,” Emori said, adding that the company is “thinking about how to incorporate hybrids and plug-in hybrids.”
At the New York Auto Show last month, Subaru unveiled the 2026 Trailseeker, its second EV for the U.S. market. The electric SUV is expected to go on sale in 2026 alongside the smaller Solterra.
Despite its electric push, the company has pulled its earnings forecast for the year, citing uncertainty over the U.S. tariff policy. Subaru expects global sales to fall further to around 900,000 vehicles this year, down another 4% from 2023.
