Honda Expects Losses of Up to $15.7 Billion Due to Reassessment of Electric Vehicle Strategy

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This Japanese automaker expects to record its first annual loss in decades

Brief Summary

Honda Motor Co. (7267) expects to incur up to $15.7 billion in related costs and losses due to reevaluating its electric vehicle strategy, and forecasts an annual net loss.

Honda announced that, due to a reassessment of its electric vehicle strategy, it will record up to $15.7 billion in related expenses and losses, resulting in its first annual loss in decades.

The Japanese automaker stated on Thursday that the total costs and losses related to this strategic reevaluation over the fiscal year ending March 31 and the coming years could reach 2.5 trillion yen. In recent months, its global competitors have issued pessimistic outlooks.

Honda said that, given the slowdown in the North American electric vehicle market, it has decided to cancel some model launches and R&D efforts. Additionally, due to increased competition in the Chinese market, the company expects to recognize impairment losses on investments in China.

Before Honda reevaluated its electric vehicle strategy, many competitors had already scaled back their EV businesses — and many American consumers remain reluctant to buy pure electric vehicles.

Jeep’s parent company Stellantis announced in February this year that it would record approximately $26 billion in expenses; Ford booked a $19.5 billion loss in December last year; General Motors announced a $6 billion expense in January.

Honda expects this fiscal year to report a net loss between 420 billion and 690 billion yen, compared to previous expectations of a profit of 300 billion yen. This will be the company’s first annual loss since it began publishing consolidated financial statements in 1977. The company maintained its full-year revenue forecast at 21.1 trillion yen.

Honda announced that some executives will voluntarily take pay cuts in the next fiscal year. CEO Takuji Tsubouchi will reduce his salary by 30% for three consecutive months.

Honda stated it will strengthen its hybrid vehicle lineup to improve profitability and plans to leverage steady earnings from its motorcycle and financial services businesses to maintain stable returns for shareholders.

Last month, the Japanese automaker reported that, despite profit growth in its motorcycle division, its automotive business posted a loss in the previous quarter ending December, due to U.S. tariffs and impairment charges related to electric vehicles.