Honda Posts First Annual Loss Since 1957 After $9 Billion EV Writedown
Updated
Updated · Reuters · May 14
Honda Posts First Annual Loss Since 1957 After $9 Billion EV Writedown
9 articles · Updated · Reuters · May 14
1.45 trillion yen in EV-related losses pushed Honda to a 414.3 billion yen operating loss for the year ended March, its first annual loss in nearly 70 years as a listed company.
Weak EV demand drove the retreat: Honda scrapped its target for EVs to reach 20% of new-car sales by 2030, dropped its 2040 full electrification goal and indefinitely suspended its $11 billion Canada EV project.
Honda expects another 500 billion yen in EV costs this fiscal year but still forecasts a 500 billion yen operating profit, relying on cost cuts and its motorcycle business.
Shares closed up 3.8% after Honda kept its annual dividend at 70 yen and pledged at least 800 billion yen in shareholder returns over three years.
Record motorcycle sales in India and Brazil are cushioning weaker car sales in China, though Honda warned higher material costs, including from the Middle East conflict, could cut current-year operating profit by 313 billion yen.
After a multi-billion dollar EV failure, can Honda's big bet on hybrids steer it away from another historic loss?
As auto giants retreat from all-electric goals, is the EV dream facing an industry-wide reality check?
With EV demand collapsing and gas prices soaring, are hybrids the real winner in the race for the future of cars?
Honda’s $15.7 Billion EV Setback: Historic Loss, Strategy Reversal, and the Future of Japan’s Auto Industry
Overview
Honda invested heavily in research and development to boost electric vehicle (EV) sales, but this aggressive strategy did not deliver the expected results. Despite the large investment, battery-powered cars made up only a small fraction of Honda’s total sales last year, leading to low EV sales volume and significant financial challenges. As a result, Honda faced major financial repercussions and decided to reverse its EV strategy. The company responded to these tough market conditions by canceling several EV models in the US, marking a clear shift away from its previous EV ambitions and highlighting the difficulties of competing in the evolving automotive market.