Honda Motor Company has posted its first annual loss in 70 years, reporting an operating deficit of ¥423bn for the year ending March 2026 as weaker-than-expected demand for electric vehicles forced it to scrap some production targets and rethink its rollout.
The loss, equal to about $2.68bn or £1.99bn, marks a sharp break for Japan’s second largest car firm and comes as chief executive Toshihiro Mibe said Honda would scrap its aim for EVs to make up a fifth of new car sales by 2030. He also said the company was abandoning its target for all of its vehicles to be EV by 2040. Honda said it would lean more heavily on motorcycles, financial services and hybrid vehicle manufacturing, while treating North America, Japan and India as priority markets for future growth.
The company was first listed on the stock market in 1957, and its latest results show how quickly the EV market has turned from promise to pressure for a company that once bet heavily on a full electric transition. Honda said changes in US policy added to the strain, including the removal in September 2025 of tax credits of up to $7,500 for new EV purchases and tariffs on imported cars and auto parts that bruised profits across the sector.
Honda also said it would source parts from China, where prices are lower, in an effort to hold down costs. It suspended plans to build EVs and batteries in Canada, and said it expected another ¥512bn in EV-related losses in the next financial year ending March 2027. The company’s message was unmistakable: the EV bet has become a costly detour, and Honda is pulling back before the losses deepen further.
Market analyst Danni Hewson said the result was “a bleak milestone for Honda but not a surprising one,” adding that legacy automakers had gambled on motorists moving quickly to EVs and lost as the market shifted. “Companies like Honda are having to adapt on the fly which is tough for businesses of this scale,” Hewson said.
For Honda, the next phase is not about chasing a deadline on all-electric sales. It is about cutting exposure, protecting cash and building around the businesses it says can still carry growth in the years ahead.
