Honda forecasts over $4B loss after scrapping EV plans
What's the story
Honda has canceled the development and launch of three electric vehicles (EVs) in North America. The decision comes as part of a restructuring plan amid rising EV-related costs. The affected models are the Honda 0 SUV, Honda 0 Saloon sedan, and Acura RSX. They were all set to be manufactured at Honda's Ohio-based EV Hub later this year.
Strategy shift
US policy changes and competition from China
Honda has had to rethink its EV strategy due to major policy changes in the US. These include relaxed fuel-efficiency standards and the end of federal EV subsidies. The company is also facing stiff competition from China. This is not an isolated case; other automakers like Hyundai and Ford have also recently scrapped their upcoming EV projects for similar reasons.
Market challenges
Chinese EV makers are gaining ground rapidly
Honda has also flagged its declining competitiveness in the face of fierce competition, especially from Chinese EV makers. These companies are rapidly emerging and leveraging their short product development cycles to gain market share. In fact, BYD's luxury brand Denza recently launched a new model with an impressive range of 1,036km on a single charge under China's CLTC testing standard.
Financial outlook
Honda's financial forecast and future plans
Honda expects record losses for the fiscal year ending March 2026, with operating costs between ¥820 billion and ¥1.12 trillion. Net losses could climb as high as ¥690 billion ($4.3 billion), according to the company's latest warning. The Japanese marque also anticipates further expenses and losses next year due to its shift in EV strategy. Despite these challenges, Honda plans to strengthen its hybrid models and reassess resource allocation as part of a revised global business strategy due in May.