Key Takeaways
- Honda disclosed write-downs reaching $15.7 billion (2.5 trillion yen) as part of a major EV strategy revision
- The automaker will report its first annual loss since going public in 1957, shifting from an expected 550 billion yen profit to a 570 billion yen loss
- Three electric vehicle models intended for U.S. manufacturing have been completely scrapped
- Shares of Honda (HMC) in U.S. markets dropped approximately 8% during premarket hours
- Total EV-related write-downs across major automakers including Honda, Ford, GM, and Stellantis now surpass $67 billion
Honda Motor has unveiled one of the most substantial write-downs in automotive sector history, disclosing charges totaling $15.7 billion connected to a comprehensive overhaul of its electric vehicle approach.
The Japanese manufacturer revealed it anticipates posting losses of up to 570 billion yen ($3.6 billion) for the fiscal period concluding in March 2026. This represents a dramatic reversal from its earlier projection of 550 billion yen in profits and will be Honda’s first annual deficit since its public listing nearly 68 years ago.
Shares of Honda traded in the United States plummeted approximately 8% during premarket sessions Thursday after the disclosure.
The financial charges stem from what Honda characterized as a comprehensive “reassessment of automobile electrification strategy.” The translation: a strategic shift toward hybrid vehicles, reduced EV commitments, and a significantly downsized North American growth blueprint.
The company is eliminating three electric vehicle models previously earmarked for domestic U.S. manufacturing. While market observers anticipated additional EV-related financial pain, the complete abandonment of these projects exceeded expectations. Julie Boote, automotive analyst at Pelham Smithers Associates, described the magnitude of the write-down as “a surprise,” observing that Honda maintained “ambitious EV expansion plan, which was badly affected by the changing market environment.”
Chief Executive Toshihiro Mibe attributed the decision to plummeting EV demand, stating that maintaining profitability in the electric segment had become “very difficult.” Both he and Executive Vice President Noriya Kaihara agreed to forfeit 30% of their salaries for a three-month period in response.
Sector-Wide Electric Vehicle Struggles
Honda’s massive charge brings the automotive sector’s aggregate EV-related write-downs to approximately $67 billion. Ford has recorded $19 billion in electric vehicle charges, Stellantis $25 billion, and GM $7.6 billion — with General Motors signaling additional losses may be forthcoming.
The aggregate market capitalization of GM, Ford, Stellantis, and Honda stands at roughly $180 billion, highlighting the extraordinary magnitude of these financial setbacks.
These write-downs stem from excessive optimism regarding EV market expansion. Tesla’s explosive growth trajectory from 2020 through 2023 — with vehicle deliveries increasing more than threefold — prompted competitors to project continued rapid market acceleration. Rivian’s November 2021 public offering, which temporarily valued the startup near $160 billion, reinforced forecasts suggesting Americans would purchase 3 million EVs by 2025.
The reality: 1.3 million units — unchanged from 2024, representing approximately 8% of total new vehicle sales in the United States.
Political Environment Intensifies Challenges
The Trump administration’s elimination of EV subsidies has amplified industry headwinds. The $7,500 federal EV purchase credit was terminated in September, with industry analysts projecting potential 50% declines in U.S. electric vehicle sales throughout 2026.
Honda additionally acknowledged write-downs affecting its Chinese operations, where the company has fallen behind software-driven competitors such as BYD.
The automaker indicated it will prioritize expanding its product portfolio in India, a regional market where Chinese manufacturers face significant barriers to entry — circumstances similar to the United States.
Honda intends to unveil a restructured medium-to-long-term business plan during the upcoming fiscal year. As of Thursday’s premarket trading, HMC shares declined approximately 8%.
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