Honda Motor Company posts ¥423bn loss and scraps 2040 EV target
Honda Motor Company reported a ¥423bn operating loss for the year ending March 2026 and scrapped some of its EV ambitions. The automaker said demand for electric vehicles was weaker than it had forecast, while US policy changes and tariffs added to the damage. The result is a sharper pullback from a plan that had pointed to a fully electric lineup by 2040.
Toshihiro Mibe drops 2040 plan
Toshihiro Mibe said Honda would scrap its aims for EVs to make up a fifth of new car sales by 2030 and would also abandon its target for all vehicles to be EV by 2040. Honda said it was suspending plans to build EVs and batteries in Canada, a cutback that narrows its near-term capital commitments after years of expansion talk.
¥512bn in EV-related losses are expected in the year ending March 2027, adding a second year of pressure even after the company resets its production targets. That forecast suggests Honda is choosing to absorb a higher short-term cost rather than keep funding a sales plan that no longer matches demand.
Honda shifts to hybrids
Honda said it will focus on growing its motorcycle business, financial services and hybrid vehicle manufacturing, while treating North America, Japan and India as priority markets for future growth. It also said it would source parts from China where prices are lower to keep costs down, signaling a more cost-driven supply chain as it tries to protect margins.
$2.68bn of operating loss is roughly £1.99bn, making this Honda's first annual loss in 70 years and its first listed stock-market-era stumble since 1957. Danni Hewson called it "It's a bleak milestone for Honda but not a surprising one," and said legacy automakers had gambled on a fast EV shift and lost as the world changed.
US policy hits Honda
2025 brought the policy changes Honda pointed to: tax incentives of up to $7,500 for US EV buyers were taken away, and tariffs on imported cars and auto parts were imposed before later being reduced from 25% to 15%. Honda said those shifts bruised profits across several major automakers, turning an EV slowdown into a broader earnings hit.
6-7 June 2026 is the next scheduled G7 summit, where auto trade and industrial policy may stay in focus if tariff settings or consumer EV support move again. For Honda, the immediate read-through is clearer: the company is reducing exposure to a sales mix that has not arrived on its original timetable.
Honda said it will now lean on motorcycles, finance and hybrids instead of chasing a fixed all-EV deadline. That leaves customers and investors with a narrower growth plan, but one tied more closely to the markets Honda says still have demand.
