Japanese automaker Honda Motor Co. has warned it may record its first annual loss since becoming a publicly listed company nearly seven decades ago. The company announced a potential restructuring charge of up to 2.5 trillion yen (about $15.7 billion) tied to its electric vehicle operations. Weak demand for EVs has forced Honda to reconsider major parts of its strategy. The announcement reflects growing challenges facing the global auto industry.
The company said it will cancel three electric vehicle models that were previously scheduled for production in the United States. Analysts had anticipated some losses related to EV investments, but the scale of the write-down surprised many observers. Industry analyst Julie Boote noted that Honda’s decision to cancel the entire U.S. production program was unexpected. She said the move suggests a significant shift in the company’s expansion plans.
Honda’s leadership pointed to declining EV demand as a key factor behind the decision. Chief Executive Officer Toshihiro Mibe said the market environment has made it extremely difficult to maintain profitability in the segment. The company is also reducing the value of its operations in China, where intense competition has increased pressure. Local brands have gained ground with advanced software-driven vehicles.
Financial projections show a sharp reversal from earlier expectations. Honda now forecasts a loss of up to 570 billion yen for the fiscal year ending in March. This contrasts with a previous forecast that predicted a 550 billion yen profit. The company has not recorded a full-year loss since it first listed on the stock exchange in 1957.
The broader industry is facing similar challenges as EV investments are reassessed. Automakers including Ford, General Motors, and Stellantis have also announced major write-downs linked to electric vehicle programs. Combined industry charges are estimated at around $67 billion. Despite these setbacks, Honda plans to strengthen its lineup in markets such as India and unveil a new long-term strategy next year.