Future of Work

“We Have No Chance Against This”

Honda CEO Toshihiro Mibe wanted to understand how Chinese companies were building cars so fast. So he flew to

By Conor Healy

April 22, 2026

Honda CEO Toshihiro Mibe wanted to understand how Chinese companies were building cars so fast. So he flew to Shanghai and toured an auto supplier factory. He walked out with a verdict: “We have no chance against this.”

The factory floor had no humans on it. Parts procurement, logistics, assembly: all automated. The facility supplies Tesla and maintains consistent quality while keeping labour costs near zero. Mibe saw the source of China’s competitive advantage up close. Fast. Cheap. Good. The three things you are not supposed to get at the same time.

He is not the first automotive CEO to return from China shaken. But he may be the most blunt.

The Collapse

Honda China is in freefall. In 2020, the company sold 1.62 million vehicles in the country. In 2025, that number was 640,000. For 2026, projections show output dropping below 600,000 units. Honda’s Chinese factories are running at roughly 50 percent capacity. The threshold for profitability is 75 percent.

The company has responded by cancelling its future. In March 2026, Honda scrapped three electric vehicles it had been developing for the US market. The joint project with Sony, which was supposed to produce the Afeela sedan, is dead. Honda recorded a $15.7 billion writedown on its electric vehicle business. The entire EV segment accounted for just 2.5 percent of Honda’s 2025 sales.

Meanwhile, Chinese automakers are shipping new models every 18 to 24 months. Honda takes twice as long. By the time a Honda reaches the market, its Chinese competitors have already moved on to the next generation.

What He Saw

The factory Mibe visited was operated by a major Chinese parts manufacturer. The details that struck him were not exotic. They were methodical. Every step of the production process was integrated. Zero waiting for parts. No bottlenecks in logistics. No variation in quality. The kind of efficiency that Toyota spent decades perfecting, achieved by a supplier most Western consumers have never heard of.

Chinese factories are not winning because labour is cheap. Labour is increasingly irrelevant. They are winning because they have automated faster, integrated deeper, and invested more aggressively than anyone else. The country now controls the entire supply chain for electric vehicles: batteries, chips, software, motors, screens. When a Chinese automaker needs a component, it does not negotiate with a supplier across an ocean. It calls someone down the road.

This is what Mibe meant when he returned to Japan and told his suppliers: “We must act quickly.”

The Pattern

Mibe is not an outlier. He is the third major automotive CEO to deliver the same warning after visiting China.

In 2023, Ford CEO Jim Farley stood on stage at the Morgan Stanley Sustainable Finance Summit and described driving Chinese electric vehicles during a trip to the country. The software was smooth. The screens worked like smartphones. Updates arrived over the air. “I think we see the Chinese as the main competitor, not GM or Toyota,” he said. Then he went further: “They will put us out of business.”

Toyota CEO Koji Sato has been equally direct. Speaking to his own suppliers, he said Toyota “will not survive” without a major internal transformation. The company that invented lean manufacturing, that wrote the playbook the entire industry follows, now believes its methods are too slow.

When three CEOs from three different countries say the same thing after visiting the same place, that is not panic. That is pattern recognition.

Back to 1960

Honda’s answer is to reach back to the 1960s. The company is spinning off its engineers into a semi-independent research and development arm, reversing a centralisation effort from 2020. The original R&D division, established in 1960 by founder Soichiro Honda, operated with significant autonomy. That freedom produced the CVCC engine in the early 1970s, which helped the Civic meet US emissions standards and turned Honda into a serious competitor in America.

The theory is that creative freedom beats rigid structure. Give engineers room to experiment without corporate interference, and breakthroughs follow. It worked once. Honda is betting it can work again.

Whether this will be enough is unclear. The problem Honda faces is not a lack of creativity. It is a lack of speed. Chinese automakers are not producing better ideas. They are producing ideas faster, testing them faster, and shipping them faster. An organisational restructure does not solve that. It might help, eventually. But “eventually” is a luxury Honda China no longer has.

Toyota and Nissan have taken a different approach. Both are partnering with Chinese companies to learn their methods and co-develop vehicles for the local market. Honda, so far, is trying to fix itself from within.

Not Just Honda

The story of Honda China is not really about Honda. It is about what happens when an industry’s centre of gravity shifts.

For a century, automotive innovation moved from America to Japan to Germany and back again. The names changed but the geography stayed roughly the same. China was a market to sell into, not a competitor to fear. That assumption held until it did not.

BYD sold more electric vehicles than Tesla in 2024. Geely owns Volvo. Nio is building battery swap stations across Europe. These are not companies copying Western designs anymore. They are companies setting the pace.

Cars are just where you notice it first. The same dynamics are playing out in solar panels, batteries, consumer electronics, and increasingly in semiconductors. The playbook is consistent: massive investment, vertical integration, rapid iteration, and a willingness to accept losses in pursuit of market share.

Western companies have spent decades optimising for efficiency. Chinese companies optimised for speed. In a slow-moving market, efficiency wins. In a fast-moving market, speed wins. The market is moving fast.

The Clock

Honda is not giving up. The company plans to build its next global EV, the 0 Alpha, in India to reduce costs. It is accelerating digitisation across its production systems. It is trying to learn from what Mibe saw in Shanghai.

But the window is closing. Honda China was once a growth story. Now it is a case study in how quickly dominance can evaporate. Five years ago, Honda sold more than 1.6 million cars in China. This year, it will struggle to sell 600,000.

Mibe’s statement was not a surrender. It was a diagnosis. Acting on it is another thing entirely.