Honda Motor Co. has announced a major restructuring of its electric vehicle business that could lead to its first annual loss since becoming a publicly listed company. The automaker revealed that it may record charges of up to 2.5 trillion yen. Slowing demand for EVs has forced many companies in the automotive sector to reconsider expansion plans. Honda’s decision reflects the growing uncertainty in the market.
The company confirmed that three electric vehicle models planned for production in the United States will be scrapped. Analysts had expected Honda to scale down the program, but the complete cancellation surprised industry observers. Experts say the decision indicates a major shift in the company’s EV strategy. Market conditions appear to have changed more rapidly than anticipated.
Chief executive Toshihiro Mibe said declining demand for electric vehicles has made it extremely difficult to sustain profitability. Honda is also reducing the value of its business operations in China. In that market, domestic brands like BYD have gained a competitive advantage with advanced software-driven vehicles.
The automaker now expects to post a loss of up to 570 billion yen for the fiscal year ending in March. This represents a dramatic shift from the previous forecast of a 550 billion yen profit. Following the announcement, Honda’s US-listed shares dropped significantly in early trading.
Other major car manufacturers have faced similar challenges. Automakers including Ford, General Motors, and Stellantis have all reported billions of dollars in EV-related write-downs. Honda says it will now focus on improving competitiveness and expanding in markets such as India.