Honda’s First Annual Loss After $10bn EV Writedown

Japanese carmaker Honda recorded an operating loss of JP¥414.3 (US$2.6bn) for financial year 2025/26, with the company citing EV related losses as well as tariff impacts as key concerns for the business. 

Honda cited revisions to the EV incentives in the US as well as the easing of fossil fuel regulations as key drivers of its decrease in EV sales volume. 

This is Japan’s second largest carmaker’s first annual loss in 70 years, and its first since the company went public in the 1950’s.

Earlier this year, Honda said it expected to record annual losses and cancelled three EV models planned for North America: the Honda 0 SUV, Honda 0 Saloon and Acura RSX.

Honda’s first annual loss

In the financial year 2025/2026, Honda recorded total EV-related losses of JP¥1.578tn (US$9.95bn) which is slightly shy of US$10bn.

Honda was previously committed to being a fully electric car company by 2040 and has updated its strategy to be carbon neutral by 2050. 

In its company presentation script covering the financial year, Honda said: “excluding EV-related losses, we were profitable.”

The company noted the business environment was harsh beyond EVs and mentioned factors such as higher tariff burdens and semiconductor supply chain shortages affecting it. 

Looking forward, the company said it would expand production in India, where its motorcycle sales have been strong. It said in North America it will aim to expand profitability by strengthening sales of ICE and HEV models.

Honda’s scrapped US models 

The news of the scrapped EV models, Honda 0 SUV, Honda 0 Saloon and Acura RSX, first came in March 2026. 

Honda’s CEO Toshihiro Mibe said at the time: “Despite all measures we have taken, it will be extremely difficult to ensure profitability of our EV models. 

“Moving forward into the production and sales phase under the current conditions would likely result in further losses over the long term.
“We are fully aware that many Honda associates, business partners and those who are on the front lines of sales have devoted great passion to these EV models and many customers have high expectations for them.”

At the time, Toshihiro said the maximum total amount of losses estimated as of today was JP¥2.5tn (US$15.7bn) for EV related losses. The Honda CEO noted that it was regrettable that such a large loss was recorded. 

Toshihiro added: “What is expected of the Honda management team now is not to justify the past, but to face this reality squarely and transition our automobile business to a structure that enables mid to long-term growth.”

The scrapped AFEELA

Earlier this year, Sony Honda Mobility, established in 2022 to produce EVs, announced its flagship vehicle, the AFEELA 1, had been scrapped.

Both the AFEELA 1 and its second prototype model that had been under development have been discontinued, following discussion between parent companies Sony and Honda. 

As a result of the decision, Sony Honda Mobility issued full refunds of the reservation fees received for current holders of reservations for AFEELA 1 in California.

Honda and Sony said in a joint statement that they “intend to jointly announce SHM’s future direction, mid to long-term positioning as well as contributions to the future of mobility at the earliest possible opportunity”.