Honda Forecasts First-Ever Net Loss of Up to ¥690 Billion, Cancels Key EV Models

Honda announced on the 12th that it expects to report a net loss of up to 690 billion yen for the fiscal year ending March 2026. This would mark the first net loss since the company's listing, sending shockwaves through the automotive industry. The company had previously forecast a profit, but the main reason for this reversal is a massive impairment loss incurred due to a significant revision of its electric vehicle (EV) business strategy.

According to the announcement, Honda re-evaluated its electrification strategy in response to a sharp slowdown in demand for electric vehicles (EVs) in the North American market. As a result, it decided to cancel the development and launch of three EV models that were part of its “Honda 0” series: the “Zero SUV,” the “Zero Saloon,” and the luxury brand “Acura RSX.” This decision is expected to result in impairment losses and disposal costs ranging from 820 billion yen to 1.12 trillion yen, which will be recorded as extraordinary losses. Furthermore, the company anticipates an impairment loss of 110 billion yen to 150 billion yen in its China business.

This massive deficit is also being interpreted as a potential withdrawal from Honda's previously stated goal of eliminating gasoline-powered vehicles by 2040, forcing the company to reconsider the future direction of its EV shift. Amid a market trend showing a return to more pragmatic options like hybrid vehicles (HVs) rather than an exclusive focus on EVs, Honda's strategic pivot is drawing attention as a reflection of the broader automotive industry's dynamics.

Following the breaking news, Honda shares fell in the Japanese market on the 12th. Disappointment in the market was evident, with shares already down 5.4% in the proprietary trading system (PTS). Some analysts point to the possibility of additional losses occurring after the fiscal year ending March 2027, with some estimates suggesting the total loss could reach up to 2.5 trillion yen when combined with the current fiscal year.

Honda is a company with a rich history of technological prowess, once dominating the world in F1 racing and other fields. All eyes are now on whether it can overcome this challenge and chart a new growth strategy.

The context

This article discusses Honda's unprecedented projected net loss for the fiscal year ending March 2026. For non-Japanese readers, here's some background: