This one’s a biggie. Honda has simply posted its first annual loss since changing into a publicly traded firm again in 1957. And it’s not a small quantity both – Honda reported a staggering web lack of US$2.7 billion for the fiscal yr ending March 31.
That’s a dramatic reversal when in comparison with the corporate’s revenue of greater than $7.5 billion the earlier fiscal yr. So what went flawed?
A significant wager on electrification merely didn’t repay the best way the Japanese big had hoped. Talking at a press convention on Could 14, Honda CEO Toshihiro Mibe mentioned how dramatically the EV market has modified for each shoppers and companies. He acknowledged that though Honda tried to reply, it failed to take action rapidly sufficient.
In line with Mibe, the corporate is now abandoning each its objective of totally transitioning to electrical and fuel-cell automobile gross sales by 2040 and its goal of EVs accounting for one-fifth of all new-car gross sales by 2030. Not solely that, Honda’s $10.4-billion funding plan to fabricate EVs and batteries in Canada has now been placed on maintain indefinitely.
Honda
Honda additionally admitted that adjustments in US coverage, together with the removing of tax incentives for EV patrons and the introduction of tariffs, have been main contributing elements behind the losses.
That led to a pointy decline in Honda’s EV gross sales. Within the last quarter of 2025, the corporate offered solely round 15,000 EVs globally. In the USA alone, gross sales of the Honda Prologue reportedly fell by as a lot as 86%.
Then once more, Honda is hardly alone on this battle. Automakers throughout the board are coping with sluggish EV gross sales regardless of rising gasoline costs in 2026. However credit score the place it’s due: Honda has been fast to behave by pivoting tougher towards hybrid know-how, with formidable plans to launch 15 new hybrid fashions by 2030.
And regardless of the ocean of pink ink, Honda’s inventory has really risen considerably over the previous few days. Shares climbed 7% on Could 15 alone. Why? There are a number of causes.
Honda
For one, traders have been shopping for into the subsequent 12 months somewhat than reacting purely to the previous yr’s outcomes. Secondly, the market seems way more fascinated by Honda’s projected working revenue of $3.14 billion for the approaching yr than Bloomberg’s consensus estimate of $1.3 billion.
And maybe most significantly, Honda had already warned traders again in March that it anticipated to incur as much as $15.7 billion in EV-related bills. In that sense, the market response wasn’t fairly as paradoxical because it first appeared. A lot of the shock had already been priced in when the sooner warning was issued. This newest report merely confirmed the size of the write-down and demonstrated that the injury was concentrated round one main strategic gamble.
What makes Honda’s first annual loss in practically 70 years so vital isn’t simply the quantity itself – it’s what Honda has traditionally represented throughout the automotive world. This can be a firm that constructed its popularity on engineering self-discipline, monetary warning, and an virtually irritating degree of consistency.
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Honda wasn’t speculated to be the corporate making panic pivots or swallowing multi-billion-dollar write-downs whereas chasing the EV transition. And but right here we’re: one of many business’s most methodical producers instantly wanting simply as susceptible and unsure as everybody else.
Nonetheless, it’s not all doom and gloom. Honda expects to return to profitability this yr, banking on cost-cutting measures and the continued power of its motorbike enterprise to assist stabilize the corporate. “The motorbike enterprise will broaden manufacturing capability in India … and intention for record-high gross sales of twenty-two.8 million items,” Honda stated in its earnings assertion.
However this story is greater than Honda alone. For years, the worldwide automotive business handled electrification as an inevitable straight street into the longer term. Huge EV investments, manufacturing unit expansions, and aggressive deadlines have been all constructed across the assumption that shopper demand would rise in lockstep with company ambition.
Honda’s loss is a reminder that the transition is popping out to be far messier than the PowerPoint displays promised. Legacy automakers now discover themselves trapped in maybe the worst potential center floor: too deep into EV spending to retreat cleanly, but not far sufficient forward to dominate the market the best way Tesla or China’s BYD already do.
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However in the event you ask me, there’s one thing symbolic about Honda being the corporate to blink first. As a result of if even Honda – with its international scale, motorbike earnings, and famously conservative administration – can stumble this tough, it sends a deeply uncomfortable message concerning the state of the business total.
Honda’s loss isn’t only a unhealthy monetary yr. It appears like the primary actual crack within the phantasm that the business had this transition totally discovered.
Supply: Honda
