Honda has reported its first operating loss since 1957, confirming a major shift in strategy after years of betting on rapid electrification. The company said it posted an operating loss of 413.4 billion yen and a net loss of 423.9 billion yen for the fiscal year through March, driven largely by hefty write-downs in its electric-vehicle (EV) business as it rethinks product plans and market priorities.
Car sales fell to 3.4 million four-wheeled vehicles worldwide, down from 3.7 million the prior year, while Honda’s motorcycle arm — historically a reliable profit center — sold 22.1 million units, up from 20 million, helping to cushion the hit. Investors appeared to take the news in stride: shares jumped as much as 8% early in trading after the company said it expects to return to profitability by the fiscal year ending March 2027.
Why the reversal on EVs
Honda blamed several external and strategic factors for its losses. A sharp policy shift in the United States under the current administration removed key tax incentives for EV buyers and introduced tariffs on imported cars and parts; although those levies were later reduced from 25% to 15%, Honda says the changes undermined the economics of its U.S.-focused EV investments. The company also warned of a decline in competitiveness in China and other Asian markets as local manufacturers rapidly improve their electric and connected offerings.
Geopolitical strains — including the war in the Middle East — and resulting energy and supply-chain pressures also weighed on global demand and costs. At the same time, EV demand has softened in some regions, prompting Honda to pause or cancel certain projects it had pursued aggressively.
Strategic shifts and product plans
As part of the pivot, Honda has scaled back its all-electric roadmap and emphasized hybrids and conventional internal-combustion models as transitional options, especially in the U.S. market. The company showed two new hybrid prototypes — a family sedan and an SUV — tailored to American buyer preferences. Last month it abruptly ended development of two planned electric models with electronics partner Sony, illustrating how quickly the company is rethinking partnerships and product priorities.
CEO Toshihiro Mibe said Honda will continue pursuing carbon neutrality and investing in future technologies, including EV batteries, but that the company must balance that goal with continued work on hybrids and fuel-powered vehicles. When asked whether he would resign over the results, Mibe said he intends to focus on executing the turnaround plan.
Industry context
Honda’s troubles come amid broader strain across Japanese automakers. Toyota has warned of a sharp drop in profits, Nissan posted multi-billion-dollar losses and is cutting production and jobs, while Suzuki stands out with revenue growth thanks to strong performance in India and Latin America.
Looking ahead, Honda is betting on a staged approach: slowing some electric investments, leaning into hybrids and popular ICE models where demand remains, and continuing R&D on batteries and future tech — all while aiming to restore profitability within the next one to two fiscal years.