Honda Faces Up to $4.33 Billion Loss, Scales Back EV Push in North America

Takeaways by AI

Honda warns of a possible ¥690 billion ($4.33B) net loss for fiscal 2025, its first annual loss since 1957.
Honda will cancel three North America EV models and take up to ¥2.5 trillion ($15.7B) in impairments.
Honda shifts to hybrids and trims pure-EV plans after falling sales and weak China EV performance.

Honda has decided to cancel three EV models planned for North America and may record up to 2.5 trillion yen ($15.7 billion) in asset impairments as it adjusts its EV strategy.

Honda Motor said on March 12 that it expects to post an operating loss for fiscal year 2025 ending March 2026, revising its outlook sharply downward from a previously forecast operating profit of 550 billion yen ($3.45 billion).

The company now expects a full-year operating loss of between 270 billion yen ($1.70 billion) and 570 billion yen ($3.58 billion).

In terms of net profit, Honda forecasts a net loss ranging from 420 billion yen ($2.64 billion) to 690 billion yen ($4.33 billion), compared with its earlier projection of 300 billion yen ($1.88 billion) in net profit.

Table showing revisions on forecasts for consolidated financial results ending March 31, 2026, including sale revenue, operating profit, profit before income taxes, and earnings per share in billion yen. — Revisions on forecasts for Honda’s consolidated financial results ending March 31, 2026

If confirmed, this would mark the company’s first annual loss since its stock market listing in 1957.

Honda said the sharp earnings decline is mainly due to changes in global automotive demand as well as adjustments to its electrification strategy.

The company has decided to cancel the development and launch of three battery electric vehicles originally planned for production in North America and will record impairment losses on related assets.

The total impact of the write-downs is expected to reach as much as 2.5 trillion yen ($15.7 billion).

Honda noted in the announcement that growth in the global electric vehicle market is slowing, while emerging EV manufacturers are rapidly gaining market share, intensifying competition.

In addition to the EV project adjustments, the company also recorded impairment losses related to intensifying competition in the Chinese market.

A sleek, purple electric SUV displayed at an auto show, featuring modern design elements and a futuristic look. — GAC Honda P7

As part of its electrification transition, Honda is also adjusting its strategy. The company said it will strengthen its hybrid vehicle lineup while reducing the number of pure electric models in its portfolio.

Sales data show that Honda’s overall global deliveries have been declining. In 2025, the company sold 3,521,905 vehicles worldwide, down 7.56% from 3.81 million units the previous year.

The change has been particularly evident in China. Honda sold 645,345 vehicles in China in 2025, a year-on-year drop of 24.28%, marking the fifth consecutive annual decline.

In December 2025 alone, Honda’s China sales stood at 66,765 units, compared with 111,870 units in the same period the previous year.

Front view of a yellow electric car model S7 against a scenic landscape with mountains and cloudy skies. — Dongfeng Honda S7

In the transition toward new energy vehicles, Honda launched two electric models in China last year, the Dongfeng Honda S7 and the GAC Honda P7, but market response fell short of expectations.

For the full year 2025, the S7 and P7 recorded sales of 2,178 units and 3,873 units respectively. By February this year, monthly sales had fallen to just 37 units and 157 units.

At the same time, Honda is seeking new growth opportunities by adjusting its product strategy.

In March, reports indicated that Honda plans to import the China-produced e:NS2 electric vehicle to the Japanese market, with sales potentially starting as early as this spring.