Honda says a change in strategy away from pure electric vehicles will cost the company roughly 2.5 trillion yen (about $15.7 billion/€13.6 billion) over several years. Japan’s second-largest automaker cited shifts in US policy, new import tariff pressures and weaker competitiveness in Asia as the reasons behind the reversal of plans to prioritize EVs.
The company said it had believed battery-electric cars were the best long-term path and had been moving to popularize them. That view changed after what it described as a US policy shift — including the removal of tax incentives for EV purchases and an easing of fossil-fuel regulations under the current administration — plus the impact of tariffs. Honda also pointed to growing competition from affordable, Chinese-made vehicles that has eroded its competitiveness in Asian markets.
As a result, Honda will cancel the launch and further development of certain electric models intended for North America, and it warned it may take write-downs on investments in China as competition intensifies. For the financial year ending March, the company now expects a net loss between 420 billion and 690 billion yen, compared with its previous forecast of about a 300 billion yen profit.
Honda’s shift echoes a similar, costly reorientation at Porsche in 2025, when that brand also scaled back its EV push and recorded a sharp profit decline. The automaker also noted that EV incentives in Europe are under pressure: the EU abandoned plans in December to fully ban sales of non-electric cars from 2035 amid opposition from countries including Germany. Pure battery-electric vehicles made up 17.4% of new EU car registrations in 2025, according to ACEA — higher than the prior year but still far from earlier all-electric targets.
(Edited by Kieran Burke)