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Honda posts first annual loss in 70 years as EV push meets policy and demand headwinds
Honda posted its first annual loss in seven decades, hit by weaker EV demand and policy shifts in the US. The company said it would scale back EV targets, shift parts sourcing to China, and focus on motorcycles, financial services and hybrids.
Why It Matters
The result highlights the risk for legacy automakers in transitioning to EVs amid shifting US policy and competitive pressure from China, with potential implications for the global auto market.
Timeline
4 Events
Honda confirms first annual loss in 70 years and outlines EV strategy changes
May 14, 2026
In a May 14, 2026 release, Honda said it would scrap some EV production targets and source parts from China to cut costs. It signaled a renewed focus on its motorcycle business, financial services and hybrid vehicle manufacture, suspended plans to build EVs and batteries in Canada, and scrapped targets for EVs to make up a fifth of new-car sales by 2030 and for all vehicles to be EV by 2040. It also forecast ¥512 billion in EV-related losses for the next financial year ending March 2027, and identified North America, Japan and India as priority markets for growth.
Honda reports operating loss for the year ending March 2026
March 2026
Honda reported an operating loss for the year ending March 2026 of ¥423 billion ($2.68 billion: £1.99 billion).
US EV tax credits scrapped in September 2025
September 2025
US consumers could previously receive up to $7,500 in tax credits for new EV purchases, but President Donald Trump scrapped these incentives in September 2025.
US tariffs on imported cars and auto parts reduced from 25% to 15% in 2025
2025
Tariffs on imported cars and auto parts in the United States were reduced from 25% to 15% in 2025, though the burden on profits for Honda and other automakers persisted.