EV policy hits Honda’s profits
Honda has posted its first full-year loss ever as a listed company after its aggressive strategy on electric cars left it with a big bill.
It booked a net loss of ¥424 billion – or about NZ$4.57b – in its 2025/26 financial year up to March 31 and took a ¥1.58 trillion hit on its EV business.
Toshihiro Mibe, chief executive officer, says: “In response to drastic shifts in the EV environment, we have promptly reorganised our EV operations and investments.”
Honda was a leader in the switch to electric by Japanese carmakers, making significant investments in EV manufacturing with a focus on the American market. However, market shifts and changes in US policy towards subsidies for electric models left it overextended.
“Honda has never recorded a loss before,” adds Mibe, pictured. “But booking a large-scale loss this time is management’s intent to avoid leaving future liabilities and to ensure the company gets back on a solid growth track.”
The company went public in 1957 and never reported a full-year loss as a public company until now. Honda posted a ¥414b operating loss. If its EV losses are factored out, the company achieved an operating profit of about ¥1tn. Its motorcycle business achieved record sales and profits.
As for 2026/27, Honda projects an operating profit of ¥500b and net profit of ¥260b. It will continue to take a hit on its EV venture and has provided a rough estimate of ¥500b in EV-related losses in the current financial year. Mibe notes the core issues facing Honda’s automotive business extend beyond slowdown in the EV market.
Honda released a turnaround plan on May 15. It intends to focus on cost optimisation in its motor-vehicle operations and increase development efficiency over the next three years. It will focus on improving the profitability of its vehicles and target a record operating profit in three years.
The company plans to redistribute research and development and production resources toward hybrids and hopes to introduce 15 such models by the 2029 financial year, primarily in North America. It will concentrate resources on high-growth economies with India being a key market.
Honda will continue to market EVs in Japan, Asia and other markets at a pace that matches local adoption while monitoring conditions in the US.
It has canned the introduction of three new models in the US – the Honda 0 Saloon, Honda 0 SUV and Acura RSX. It also has cancelled the release of Afeela EV models in America, which were developed with Sony.
