Honda Motor Co. announced on March 13, 2026 (with initial reports on March 12), a massive restructuring of its electric vehicle (EV) business, expecting up to $15.7 billion (approximately 2.5 trillion yen) in expenses and losses over the coming years.
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This includes canceling three planned battery-powered models for the U.S. market and writing down assets, leading to Honda’s first annual net loss in nearly 70 years as a listed company.
The writedown stems from a reassessment amid slowing global EV demand, policy shifts in the U.S., and intense competition, particularly in China. Honda now forecasts a net loss of up to 690 billion yen for the fiscal year ending March 2026, reversing prior profit expectations.
Massive Writedown and Model Cancellations
Honda is scrapping three key EV projects: the Honda 0 Saloon sedan, the Honda 0 SUV, and the Acura RSX, all part of the “Honda 0 Series” unveiled in recent years with a planned 2026 North American launch. These were developed on Honda’s in-house platform, with significant investments in R&D, production capacity (including its Ohio EV Hub), and supplier commitments.
The charges cover impairment of tangible and intangible assets, cancellation-related expenses, and supplier compensations, with cash outflows up to 1.7 trillion yen. Analysts noted the scale reflects overcommitment before adjusting to market realities, such as the end of U.S. EV subsidies under recent policy changes.
Honda’s global EV sales in 2025 were only about 84,000 units, or 2.5% of total vehicle sales, highlighting the limited traction despite heavy investments.
Challenges in Key Markets: U.S. and China
In the U.S., EV demand has weakened sharply following subsidy removals and tariff impacts, prompting Honda to pivot toward hybrids for better market fit. The company aims to strengthen its lineup and cost competitiveness elsewhere, including India.
China poses a longer-term threat, where Honda sold just 17,000 EVs out of 677,000 total vehicles in 2025 (about 2.5% penetration). The company cited an inability to match the value, software features, and rapid innovation from newer EV makers like BYD, amid shorter development cycles and shifting consumer preferences toward advanced driver-assistance and software-driven vehicles.
Honda is impairing investments in its Chinese operations due to declining competitiveness, raising concerns about long-term technological edge.
Financial Fallout and Market Reaction
Shares dropped nearly 6% following the news, with U.S. shares down about 8% in premarket. Executives, including CEO Toshihiro Mibe, will take voluntary pay cuts for three months as part of cost controls.
Analysts expressed shock at the writedown’s magnitude, describing it as a tough but necessary call made late in the process. This places Honda alongside other automakers facing billions in EV-related charges amid a broader industry slowdown.
The joint venture with Sony for the Afeela sedan remains under review, with no final decisions announced.
Outlook and Strategic Shift
Honda emphasized returning its auto business to profitability through hybrids in the U.S., expanded presence in growth markets, and cautious EV investments. The move underscores the global EV transition’s challenges, including policy volatility and fierce competition from Chinese manufacturers.
While painful short-term, the restructuring aims to position Honda more resiliently in a hybrid-heavy future while addressing gaps in pure EV competitiveness.