Honda posts first loss in 70 years due to EV u-turn

Honda has recorded its first annual loss since becoming a publicly listed company nearly 70 years ago, as the Japanese carmaker absorbs massive costs linked to a major overhaul of its electric vehicle strategy.

The company reported an operating loss of ¥414.3 billion (around NZ$4.7 billion) for the financial year ending March 2026, a dramatic reversal from the ¥1.2 trillion profit it posted a year earlier. The result was also worse than analysts had expected.

Much of the downturn stems from Honda’s retreat from several ambitious EV programmes, with the company booking EV-related losses totalling ¥1.45 trillion during the past financial year alone. Honda also warned it expects a further ¥500 billion in EV restructuring costs over the coming year.

The financial hit has prompted Honda to rethink its long-term electrification plans.

Chief executive Toshihiro Mibe confirmed the company is abandoning its target of having electric vehicles account for 20 percent of global sales by 2030. Honda has also stepped away from its previous goal of transitioning entirely to electric and hydrogen fuel-cell vehicles by 2040.

As part of the strategic reset, Honda has indefinitely suspended its planned Canadian EV production project, an investment programme worth approximately NZ$20 billion that would have been the company’s largest-ever investment in Canada.

The decision highlights the growing challenges facing traditional carmakers as global EV demand softens and development costs continue to escalate.

Instead of pushing deeper into fully electric vehicles, Honda is now shifting greater focus toward hybrids and profitability, while leaning heavily on its highly successful motorcycle division to stabilise earnings.

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Honda said its motorcycle business continues to perform strongly, particularly in India and Brazil, where record sales and profits helped offset weaker performance in its automotive division. The company expects motorcycle sales to climb to a record 22.8 million units globally as it expands production capacity in India.

However, analysts warn Honda’s motorcycle business may also face growing pressure as key markets increasingly transition toward electrification.

The company’s automotive operations have also been hurt by slowing sales in China, where competition from domestic manufacturers has intensified dramatically in recent years.

Honda believes cost-cutting measures and stronger motorcycle earnings will return the company to profitability in the current financial year, forecasting a ¥500 billion profit turnaround.