Honda Motor Faces First Annual Loss Since IPO After Scrapping EV Plans

Honda Motor shares dropped sharply on Friday, sliding as much as 6.7% to 1,351 yen — making it one of the worst performers on the Nikkei 225, which itself fell over 1%. The sell-off came after the Japanese automaker warned investors it expects its first annual net loss since going public in the 1950s, a historic reversal driven by the costly cancellation of a major electric vehicle initiative.

The Tokyo-listed automaker (TYO: 7267) revealed it will absorb a total charge of up to 2.5 trillion yen, equivalent to roughly $15.7 billion USD, stemming from its decision to scrap three EV models that had been slated for production in the United States. These charges will be spread across the current and upcoming fiscal years, significantly impacting Honda's bottom line.

As a result, Honda now projects a net loss of up to 630 billion yen for the current fiscal year — a dramatic swing from its earlier forecast of a 360 billion yen profit. The company attributed the reversal to a global slowdown in electric vehicle demand and mounting headwinds facing the broader automotive industry worldwide.

Adding to the financial pressure, Honda also disclosed plans to write down its China operations, anticipating an impairment loss from the region. The automaker has struggled to compete against fast-growing domestic EV manufacturers in China, where local brands have gained significant market share in recent years.

The news highlights the increasing challenges legacy automakers face as they attempt to navigate the global energy transition while managing profitability. Honda's retreat from its U.S. EV ambitions signals a broader industry recalibration, as automakers balance long-term electrification goals against near-term financial realities and shifting consumer demand across key global markets.