Honda records its first annual loss in 70 years due to electric vehicles

Honda, the second largest automaker in Japan, has announced that it has recorded its first annual loss in the last 70 years, reporting an operational loss of 423 billion yen (2.68 billion dollars) for the year ending in March 2026.

This situation was driven by inadequate investments in electric vehicles (EVs), with demand for them falling far short of the company's expectations. Honda has decided to abandon some of its electric vehicle production targets and will source parts from China to reduce costs.

Changes in U.S. policy, including the removal of tax incentives for electric vehicles and the imposition of tariffs, have contributed to the losses. Honda has abandoned its goal of having electric vehicles represent one-fifth of its sales by 2030 and of transforming its entire lineup to electric by 2040.

The company will now focus on motorcycles, financial services, and hybrid vehicles, indicating North America, Japan, and India as priority markets for growth. Analysts highlight the difficulties Honda faces in rapidly adapting to market changes.