A catastrophic failed gamble on EVs, has resulted in a dramatic $14 billion turnaround for global car giant Honda and its first annual loss in 70 years.
Like many other carmakers, Honda went ‘all chips in’ on the electric vehicle revolution. But consumers did not respond – rather the opposite.
And late Thursday, the Japanese carmaker announced a loss of 423 billion yen ($3.7bn) for the year ending March 2026.
It is the company’s first annual loss since 1955 and a remarkable turnaround on the year prior when Honda announced a profit of 1.2 trillion yen or $10.6bn.
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The vast majority of the loss came from costs associated with the cancellation of Honda’s EV plans for North America.
Even record high sales volumes for the company’s motorcycle business due to increased unit sales mainly in India and Brazil couldn’t stem the bleeding.
“The rationale for pursuing EV adoption, which was assumed as of 2021, has changed significantly,” the company said in announcing their financial results.
“EV demand has declined considerably, due to the rollback of environmental regulations in the U.S. and other factors.”
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As a result of the devastating operating result, Japan’s second largest car maker has scrapped plans for EVs to make up 20 per cent of new car sales by 2030 and also scuppered plans for all of its vehicles to be electric by 2040.
Honda said it expected 512 billion yen ($4.5bn) in EV-related losses in the next financial year.
The company has now had a “Reassessment of Business Strategy” and will focus on enhancing its hybrid-electric and software defined vehicles and on sales in India.
It will also focus on procuring cheaper parts from China.
Honda’s trouble follows a proposed merger – or takeover – with Nissan that failed in early 2025.
The company is not alone in struggling. Fellow Japanese brands Toyota, Subaru, Mazda and Nissan have recorded falls in share price recently as Tokyo’s car industry wrestles with the same issues Honda has identified – the rise of China, US tariffs and an ever-shifting regulatory environment.
American giants Ford, General Motors and the world’s biggest carmaking consortium Stellantis have all struggled with their approach to the EV transition.
