Honda Motor recorded its first-ever annual operating loss for the fiscal year ending March 2026, driven by massive write-downs in its electric vehicle (EV) operations. The company reported an operating loss of about 414 billion yen (~$2.6 billion) and a net loss of approximately 424 billion yen ($2.7 billion) for fiscal 2025, marking a significant setback for the Japanese automaker [1, 2, 3, 4, 5, 6].

The write-down related to Honda’s EV business ranged between 1.58 trillion and 2.5 trillion yen (around $10 billion), reflecting differing valuation methods across sources [5, 7, 6]. CEO Toshihiro Mibe acknowledged the challenges, saying, "In response to the drastic shifts in the EV business environment, we have promptly reorganized our EV operations and investments" [5].

Honda is scaling back its ambitious EV strategy initiated under Mibe in 2021, shifting focus toward hybrids and mixed powertrain vehicles instead. The company plans to launch 15 new hybrid models by March 2030, primarily targeting the North American market [1, 3, 8]. Honda also indefinitely paused its plans to develop an EV battery supply chain in Canada [3].

Automobile sales declined to 3.4 million units in fiscal 2025 from 3.7 million the previous year. However, Honda’s motorcycle division remained highly profitable, selling 22.1 million units and helping offset losses in the car segment [3, 4]. Christopher Richter, a senior analyst at CLSA Securities Japan, said the motorcycle business "has become a crutch for Honda that prevents them from taking a serious look at their automotive business" [3].

Honda faces increased competition from Chinese EV makers, undermining its market share especially in China and across Asia. US policy shifts under former President Donald Trump, including scrapping EV tax incentives and imposing import tariffs, further constrained its EV competitiveness [4, 6]. Honda’s restructuring includes canceling some planned EV models for North America [7, 6].

Analysts see Honda’s losses largely as one-time strategic costs rather than signs of underlying weakness. Bloomberg Intelligence analyst Tatsuo Yoshida noted, "Its ICE and HEV products are strong, and its brand power is high. Profit loss is a one-time, massive loss due to a change in strategy" [6]. Nomura analyst Toshihide Kinoshita said, "While we expect earnings to be low in 27/3, we think the time is right to price in a full-fledged recovery through 28/3 now that the company has announced revisions to its strategy" [7].

Honda forecast a return to net profit in fiscal 2027, projecting earnings between 260 billion yen ($1.65 billion) and 500 billion yen ($3.2 billion), though sources differ on the exact figure [1, 2, 3, 8, 6]. The automaker also expects sales of automobiles and motorcycles to grow in the current fiscal year ending March 2027 [3].