Honda reported its first full-year loss as losses tied to its electric-vehicle push weighed on results, a setback the company linked in part to changes in U.S. environmental and incentive policies. The Tokyo-based automaker said Thursday that it recorded a 423.9 billion yen ($2.7 billion) loss for the full year, marking the first time it has posted a full-year deficit. Honda said the financial hit reflects heavy costs for its EV strategy, including losses connected to EV operations.
In a statement, Honda estimated that losses related to its EV activities totaled about 2.5 trillion yen ($16 billion). The company said the costs were incurred mostly in the fiscal year that just ended and in the current fiscal year. Analysts cited timing as part of the problem, saying Honda may have moved too aggressively on EVs while some markets were not yet ready.
Honda also said EV demand declined “due to the rollback of environmental regulations in the U.S. and other factors,” attributing weak demand to policy shifts. The statement pointed to a wider policy environment in the United States that, Honda said, ran counter to the pace of its EV investment. Separately, analysts said Honda’s EV plans did not match demand conditions well enough quickly enough to protect profitability.
The company said it has abandoned many of its EV plans as a result. Honda cited plans it had been working on, including models tied to a joint venture with Sony Corp., which is known for working on mobility-related technologies. Honda’s broader strategy shift reflected the company’s assessment that its previous EV timetable was out of step with market readiness.
Honda’s losses also came as the company faced pressures beyond EV demand, including tariffs. The company said tariffs on imported autos and auto parts—reduced to 15% from an initial 25%—also dented profitability. Honda’s reporting also referenced changes that affected EV incentives and charging buildout in the U.S., including the Trump administration pulling back incentive programs for EVs and withholding money to states seeking to add more EV charging stations.
Despite the EV-related downturn, Honda said its motorcycle business helped offset some of the impact on the overall bottom line. Honda reported that overall sales for the fiscal year through March rose 0.5% to 21.8 trillion yen ($138 billion). The automaker said it sold 3.4 million vehicles worldwide in the fiscal year through March, down from 3.7 million the previous year, and that it sold 22.1 million motorcycles, up from 20 million a year earlier.
Honda forecast a return to profit for the fiscal year ending March 2027, predicting a profit of 260 billion yen ($1.7 billion). Chief Executive Toshihiro Mibe laid out a new growth strategy that included continuing to pursue carbon neutrality, while also acknowledging that Honda needs to work on hybrids and regular gasoline-engine models—not just electric vehicles.
When asked by a reporter whether he was considering stepping down to take responsibility for the results, a common response in Japan, Mibe said he wanted to carry out the revival plan first. “We will continue our research to develop future technologies including electric vehicle batteries,” he said. He added, “We will get back on a growth track.”