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Honda posts its first-ever annual loss as EV bets falter
15 May 2026

Japanese car giant Honda has reported its first annual loss in nearly 70 years. The company's massive investments in the electric vehicle (EV) market have not paid off as expected.

For the fiscal year ending March 2026, Honda posted a total operating loss of ¥414.3 billion ($2.63 billion).

The company has now decided to scrap some of its EV production targets and source parts from China to cut costs.

Losses attributed to changes in US policy
Policy impact

Honda has also blamed changes in US policy for its losses.

The company cited the removal of tax incentives for US consumers buying EVs and tariffs as major contributors to its financial woes.

Consumers could previously get up to $7,500 in tax credits on new EV purchases. However, this was scrapped in September 2025 under President Donald Trump.

Honda suspends plans to go fully electric by 2040
Strategic shift

Despite the financial setback, Honda remains committed to its profitable motorcycle business and financial services.

The company has identified North America, Japan, and India as key markets for future growth.

However, it has also suspended plans to manufacture EVs and batteries in Canada.

CEO Toshihiro Mibe announced that Honda would no longer pursue its goal of making EVs account for a fifth of new car sales by 2030 or the target of going fully electric or fuel-cell by 2040.

Motorcycle business remains profitable for Honda
Financial forecast

Honda expects ¥512 billion in EV-related losses for the fiscal year ending March 2027.

Despite the challenges, the company remains optimistic about returning to profitability this year, driven by cost-reduction measures and its profitable motorcycle business.

The motorcycle division plans to expand production capacity in India and aims for record-high sales of 22.8 million units.