Honda has blamed the growth of Chinese brands, along with President Donald Trump’s decision to wind back fuel standards and electric vehicle incentives, for an unprecedented financial loss.
The Japanese company will record a 2.5 trillion Yen loss ($22.4 billion) for the current financial year after it slammed the brakes on electric vehicle investment in the US.
It represents the first full-year loss Honda in nearly 70 years as a listed company.
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Honda was due to launch three electric cars in America, but decided to suspend plans to produce the battery-powered Honda 0 SUV, Honda 0 Saloon, and Acura RSX “due to a major policy change in the US”, where “demand for EVs is declining significantly”.
Essentially, President Trump’s decision to shift the US away from electric cars has cost Honda billions.
A softened stance in Europe and other regions has also hurt Honda’s bottom line.
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A statement released by the brand says “the profitability of Honda automobile business is currently declining due primarily to 1) the unfavourable impact of changes in US tariff policies on the gasoline and hybrid vehicle business and 2) a decline in the competitiveness of Honda products in Asia due to the impact of the allocation of more resources to EV development”.
“In addition, the automobile business environment surrounding Honda is undergoing significant changes, and the outlook remains uncertain,” it said.
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“Previously, with stringent environmental regulations fully implemented in the US and other countries, Honda pursued EV adoption with strong determination that striving for carbon neutrality is a responsibility Honda, as a manufacture of mobility products, must fulfil for the future. However, in the US, the expansion of the EV market has slowed down due to several factors including the easing of fossil fuel regulations and revisions to EV incentives.
“Moreover, in China, what customers value more in automobiles is shifting from hardware features, such as fuel efficiency and cabin space, to software-based features that will continuously advance according to customer preferences.”
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Honda says the “rapid emergence of newer EV manufacturers” with shorter development cycles and better software expertise resulted in a “difficult competitive environment”.
“Honda was unable to deliver products that offer value for money better than that of newer EV manufacturers, resulting in a decline in competitiveness,” it said.
“Honda automobile business has fallen into an extremely challenging earnings situation due to various factors, including its inability to respond flexibly to these changes in the business environment, compounded by a decline in the profitability of gasoline and hybrid models due to the impact of newly imposed tariffs.”
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 in the last few weeks 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.
