Honda Motor said it expects to incur significant losses after canceling the development and planned North American launch of three electric vehicle models, a decision made as the automaker reassesses its automobile electrification strategy amid shifting market conditions.
The company announced that it will halt development and production of the Honda 0 SUV, Honda 0 Saloon, and Acura RSX EV models, which were slated for production in the United States. Honda said continuing with those vehicles in the current environment of slowing EV demand would likely lead to further long term losses. As a result of the cancellation, Honda expects to record write-offs and impairment losses on assets related to the programs, along with additional costs tied to terminating development and sales activities.
Honda said the reassessment of its electrification strategy follows changes in the global automotive market, including slower growth in EV adoption in the United States, easing fossil fuel regulations, and revisions to EV incentives. The company also cited increasing competition in China, where consumer demand has shifted toward software-defined vehicles and advanced driver assistance systems developed by newer EV manufacturers with faster product cycles.
The company expects operating expenses of approximately 820 billion to 1.12 trillion yen and losses related to investments accounted for under the equity method of about 110 billion to 150 billion yen for the fiscal year ending March 31, 2026. Honda also expects to record special losses of roughly 340 billion to 570 billion yen in its non-consolidated results for the same period. Including potential additional costs in future fiscal years tied to the strategic reassessment, Honda said the total impact could reach as much as 2.5 trillion yen.
Honda revised its financial outlook for the fiscal year ending March 31, 2026, maintaining its revenue forecast of 21.1 trillion yen but lowering its operating profit guidance from a previously projected 550 billion yen to a range of 570 billion yen to 270 billion yen. Profit before income taxes is now expected to range from a 650 billion yen loss to a 310 billion yen loss, while profit attributable to owners of the parent could range from a 630 billion yen loss to a 360 billion yen profit.
Honda said declining profitability in its automobile business has also been driven by the impact of U.S. tariff policies affecting gasoline and hybrid vehicles as well as a drop in competitiveness in Asian markets after allocating greater resources to EV development.
Looking ahead, Honda said it will rebalance its strategy by strengthening its hybrid lineup while continuing to pursue long-term electrification. The company also plans to expand its model lineup and improve cost competitiveness in markets such as India and other parts of Asia where growth opportunities remain strong.
Honda said it will also restructure its cost base to align with the scale of its automobile operations while continuing to monitor EV market trends and profitability before introducing future EV models.
In response to the financial revisions and losses tied to the strategy shift, several Honda executives will voluntarily return portions of their compensation. The president and representative executive officer, along with the executive vice president, will return 30% of their monthly compensation for three months and forfeit their short-term performance-linked compensation for the fiscal year ending March 2026. Executive council members and managing executive officers involved in automobile operations will return 20% of their monthly compensation for three months. As a result, annual compensation for representative executive officers will be reduced by approximately 25% to 30% from standard levels.
