Honda Motor Co. has forecast its first annual loss in nearly 70 years after announcing massive restructuring costs tied to its electric vehicle business. The company expects charges of up to 2.5 trillion yen, equivalent to about $15.7 billion. Weak demand for EVs has forced several global automakers to adjust their plans. Honda’s announcement highlights the uncertain future of the EV transition.
The Japanese automaker said it will cancel three EV models that were scheduled for production in the United States. Analysts had expected the company to scale back its EV ambitions, but the full cancellation surprised many. Industry experts say the move reflects rapidly changing market conditions. It also suggests that Honda’s earlier EV expansion plans may have been too optimistic.
CEO Toshihiro Mibe acknowledged that falling EV demand has made profitability extremely challenging. Honda is also writing down the value of its business in China. There, intense competition from domestic electric vehicle manufacturers such as BYD has created pressure on international automakers.
Honda now expects to report a net loss of as much as 570 billion yen for the fiscal year ending in March. Previously, the company had projected a profit of about 550 billion yen. Investors reacted quickly to the announcement, sending the company’s US-listed shares down around 8 percent in early trading.
The EV slowdown has affected several automakers worldwide. Companies such as Ford and Stellantis have also announced large write-downs. Despite the setback, Honda sees growth opportunities in India and plans to unveil a new long-term business strategy during the next fiscal year.