Honda Posts First Annual Loss in 70 Years

BBC Business reported Thursday that Honda has recorded its first annual operating loss in seven decades, as a costly wager on electric vehicles failed to deliver the returns the company had anticipated.

The Japanese automaker posted an operating loss of approximately ¥423 billion, equivalent to roughly $2.68 billion, for the fiscal year ending March 2026. The result marks a stunning reversal for a company that has traded publicly since 1957.

EV Slowdown and US Policy Hit Honda Hard

Honda attributed the loss to a combination of weaker-than-expected EV consumer demand and sweeping changes to US policy. The removal of federal EV tax credits, previously worth up to $7,500 per vehicle for American buyers, dealt a sharp blow to sales projections. President Donald Trump eliminated the credits in September 2025. Tariffs on imported cars and auto parts added further pressure, even after rates were trimmed from 25% to 15%.

The company now expects EV-related losses of approximately ¥512 billion in the fiscal year ending March 2027, signaling that the financial pain is far from over.

A Legacy Giant Struggles to Pivot

Honda CEO Toshihiro Mibe confirmed the company is abandoning two headline EV commitments. The goal of EVs representing one-fifth of new car sales by 2030 has been dropped. So has the longer-term ambition of making its entire vehicle lineup fully electric by 2040. Honda also suspended plans to build EVs and batteries in Canada.

Analysts say Honda’s scale, while an asset historically, now complicates its ability to respond quickly to volatile demand shifts. “It’s a bleak milestone for Honda but not a surprising one,” Danni Hewson, head of financial analysis at AJ Bell, told BBC Business. She noted that legacy automakers broadly miscalculated how fast consumers would transition away from combustion engines.

What Honda Is Betting On Next

Rather than doubling down on EVs, Honda is redirecting focus toward its motorcycle division, hybrid vehicle production, and financial services operations. The company identified North America, Japan, and India as its core growth markets going forward. Hybrids, which require less infrastructure investment than full EVs, offer Honda a lower-risk bridge strategy while EV markets stabilize.

Hewson acknowledged a short-term tailwind for EVs from rising petrol prices, partly tied to tensions in the Middle East. But she cautioned that companies of Honda’s size face real difficulty adapting quickly to rapid market swings. More volatility, she warned, remains likely.

Honda’s retreat joins a broader pattern of legacy automakers recalibrating their all-electric timelines in response to slower-than-forecast global EV adoption.

Read Next: Nissan to Close UK Line and Cut 900 European Jobs