Honda forecasts losses up to u00a52.5 trillion after canceling three EVs and revising electrification strategy

Honda signals significant losses by aborting three EV models and readjusting the electrification strategy, with impacts of up to u00a52.5 trillion.

Honda announced a strategic revision of its electrification after canceling the development and US launch of three electric models. The measure aims to curb losses amid a less vibrant EV demand scenario and increased global competition.

The company informed that it should register write-offs and asset impairments related to the programs, in addition to costs associated with terminating development and sales activities.

What was canceled

• Honda 0 SUV — development and production halted in the US.
• Honda 0 Saloon — project cancellation.
• Acura RSX EV — development discontinued.

Financial impacts for fiscal year 2026

• Projected operating expenses between 820 billion to 1.12 trillion yen.
• Equity method investment losses between 110 billion to 150 billion yen.
• Unconsolidated special losses between 340 billion to 570 billion yen.
• Total potential impact, including future costs, could reach up to 2.5 trillion yen.

New financial outlook

• Forecasted revenue remains at 21.1 trillion yen.
• Operating profit indicated in the range between 570 billion and 270 billion yen.
• Pre-tax profit expected between -650 billion and -310 billion yen.
• Profit attributable to shareholders may range between -630 billion and +360 billion yen.

Market and future strategy

Honda attributes the drop in profitability to the impact of US tariffs on gasoline and hybrid vehicles, in addition to lower competitiveness in Asia after prioritizing EV development. The company signals a strategic rebalancing: intensifying the hybrid line, expanding the model portfolio, and increasing cost competitiveness in markets like India and other regions with higher growth potential.

There will also be a reorganization of the cost base to align the size of operations with the evolution of the EV market, with continuous monitoring of profitability before launching new electric models.

Executive reaction

To demonstrate expense containment, several Honda executives will return part of their compensation. The President and Additional Chief Executive Officer, along with the Executive Vice President, will return 30% of their monthly compensation for three months and waive their year-end variable compensation for fiscal year 2026. Members of the executive board and directors linked to automotive operations will return 20% of their monthly compensation for three months. As a result, the annual compensation for executive representatives will be reduced by about 25% to 30% compared to usual levels.

Reader, what is your take on Honda's bet? Do you believe the renewed focus on hybrids can compensate for the reassessment of the positioning in EVs? Leave your comment below with your thoughts.