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Honda has warned of up to ¥2.5tn ($15.7bn) in losses over two years from an overhaul of its electrification strategy, becoming the industry’s latest casualty from a souring outlook for electric vehicle sales in the US and fierce competition from China.
The Japanese carmaker said on Thursday it expected to make a net loss of ¥360bn to ¥630bn in the full year ending this month, versus its previous forecast of a ¥360bn profit, after announcing it would scrap three EV models planned for production in North America.
It will be the first time Honda has ever recorded an annual net loss since becoming a public company in the 1950s.
“Honda’s 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,” it said in a statement.
The company is the latest global carmaker to be stung by a slowdown in the expansion of the US EV market under the Trump administration, which has rolled back environmental regulations and subsidies supporting the uptake of battery-powered vehicles.
Honda, which is also grappling with US tariffs, had been the most aggressive among Japanese carmakers in pursuing EVs, targeting 100 per cent battery and fuel-cell vehicle sales by 2040.
But it warned in earnings last month of charges related to its EV business. Thursday’s announcement laid bare the pain of misreading the change of course in the US market. Honda’s president Toshihiro Mibe said demand for EVs was “less than half of what we were assuming” in the US market.
The three models scrapped include the Honda 0 SUV, Honda 0 Saloon and Acura RSX. The company plans to launch more hybrid vehicles for the US market.
Honda said on Thursday it also recorded impairments on its business in China, where it has failed to keep up with the rapid speed, product development and software capabilities of local rivals.
“Honda was unable to deliver products that offer value for money better than that of newer EV manufacturers, resulting in a decline in competitiveness,” the company added.
The writedowns add to a more than $65bn hit for the global car industry due to retrenchments in EV strategy.
Stellantis and Ford took a $26bn and $19.5bn charge, respectively, after cancelling electric model launches.
Mibe said he would return 30 per cent of his monthly pay for three months because of the heavy losses associated with the strategic reversal, while automobile business executives will return 20 per cent of their compensation.
Honda has not decided whether its EV being jointly developed with Sony for the US market will also be scrapped, but Mibe said that it was under discussion.
