Honda Motor Co. has announced a sweeping reset of its electric vehicle strategy that could result in its first annual loss since going public in 1957. The automaker revealed potential restructuring costs of up to 2.5 trillion yen. The move reflects weakening demand for EVs and shifting industry conditions. The development has raised concerns among investors.
As part of the restructuring, Honda will cancel three EV models that were planned for production in the United States. Analysts had expected some reduction in EV investments but were surprised by the scale of the move. Experts say the cancellation indicates a significant shift in the company’s long-term plans.
Chief executive Toshihiro Mibe said falling demand for electric vehicles has made it extremely difficult to sustain profitability. Honda is also reducing the value of its China business. Domestic competitors such as BYD have gained momentum with technologically advanced vehicles.
The financial outlook for the current fiscal year has changed dramatically. Honda now forecasts a loss of up to 570 billion yen instead of the previously expected profit of 550 billion yen. The announcement triggered a decline in the company’s US-listed shares during premarket trading.
The EV slowdown has affected the wider automotive industry. Major companies including Ford, General Motors, and Stellantis have also reported billions in write-downs. Honda plans to focus on strengthening competitiveness and expanding in growing markets like India.