Honda Faces Up to $15.7 Billion in Losses Due to Reassessment of EV Strategy

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This Japanese automaker expects to turn to a net loss this fiscal year

A Honda dealership exterior, prominently displaying the Honda logo on the building, with several cars parked in front. Due to the slowdown in the North American electric vehicle market, Honda is canceling some models’ launches and R&D.

Brief Summary

Honda Motor Co. expects that re-evaluating its electric vehicle strategy will incur up to $15.7 billion in costs and losses, and forecasts a net loss for this fiscal year.

Honda announced on Thursday that, due to the re-evaluation of its electric vehicle strategy, it will record up to $15.7 billion in related costs and losses, resulting in an expected annual net loss for this fiscal year.

The Japanese automaker stated that, for the fiscal year ending March 31 and the coming years, the total costs and losses related to the EV strategy re-evaluation could reach up to 2.5 trillion yen. In recent months, its global competitors have also issued pessimistic outlooks.

Honda said that, given the slowdown in the North American EV market, it has decided to cancel some model launches and R&D. Additionally, due to increased competition in the Chinese market, the company expects to recognize impairment losses on investments in China.

Before re-evaluating its EV strategy, many competitors had already scaled back their EV businesses — and many U.S. consumers remain unwilling to buy pure electric vehicles.

Jeep parent company Stellantis announced in February this year that it would record approximately $26 billion in expenses; Ford booked a $19.5 billion loss in December last year; General Motors announced a $6 billion expense in January.

Honda expects a net loss between 420 billion and 690 billion yen this fiscal year, compared to its previous forecast of a 300 billion yen profit. The company maintained its full-year revenue forecast at 21.1 trillion yen.

Honda stated that some senior executives will voluntarily take pay cuts next fiscal year. CEO Takuji Takuji will reduce his salary by 30% for three consecutive months.

Honda plans to strengthen its hybrid vehicle lineup to improve profitability and, relying on steady earnings from its motorcycle and financial services businesses, continue providing stable returns to shareholders.

Last month, the Japanese automaker announced that, despite profit growth in its motorcycle division, its automotive business posted a loss for the quarter ending December, affected by U.S. tariffs and EV-related impairments.