Honda Motor Co. reported its first-ever full-year net loss on Thursday, posting a 423.9 billion yen ($2.7 billion) deficit for the fiscal year ended March 31, as heavy spending on electric vehicles collided with the Trump administration’s pullback of environmental regulations and tariffs on imported vehicles. In a statement, the Tokyo-based automaker said that EV demand had “declined considerably, due to the rollback of environmental regulations in the U.S. and other factors.”
The company estimated that losses tied to its EV operations would total 2.5 trillion yen ($16 billion), most of which were incurred in the recently completed fiscal year and the current one. Faced with that financial strain, Honda abandoned many of its planned EV models, including those under development in a joint venture with Sony Corp.
The Trump administration has dismantled federal incentives for electric vehicles, withheld funding for states seeking to expand charging infrastructure, and moved to block California’s stringent vehicle emissions mandates. At the same time, gasoline prices have risen amid the war in Iran, adding another layer of pressure on automakers.
Trump’s tariffs on imported autos and auto parts — set at 15% after being lowered from an initial 25% — also weighed on Honda’s bottom line, the company said. Honda sold 3.4 million vehicles worldwide in the fiscal year, down from 3.7 million the previous year.
A robust motorcycle business partially offset the automotive losses. Honda sold 22.1 million motorcycles during the period, up from 20 million a year earlier, with particularly strong demand in markets such as India. Overall revenue rose 0.5% to 21.8 trillion yen ($138 billion).
In a news conference in Tokyo, Chief Executive Toshihiro Mibe outlined a growth strategy that would continue pursuing carbon neutrality but acknowledged the company must also work on hybrids and conventional gasoline-engine models. “We will continue our research to develop future technologies including electric vehicle batteries,” Mibe said. “We will get back on a growth track.”
Asked whether he would step down to take responsibility for the results — a customary move among Japanese executives — Mibe said he first wanted to carry out the revival plan. Honda forecast a return to profit of 260 billion yen ($1.7 billion) for the current fiscal year.