Honda Motor Co. has warned it may post its first annual loss in almost seven decades as a publicly traded company. The automaker said restructuring costs related to its electric vehicle program could reach 2.5 trillion yen. Weak demand for EVs has prompted the company to revise its expansion strategy. The move reflects broader challenges facing the global automotive sector.
The company confirmed it will cancel three electric vehicle models planned for production in the United States. Analysts had anticipated financial adjustments but were surprised by the size of the write-down. According to industry experts, Honda had previously outlined an ambitious EV growth strategy. However, changing market conditions have forced the company to reconsider its plans.
Chief executive Toshihiro Mibe said falling demand for electric vehicles has made profitability difficult to achieve. Honda is also revising the valuation of its operations in China. Competition from local EV manufacturers such as BYD has intensified. These companies have gained popularity with advanced software-focused vehicles.
The financial impact is significant for the Japanese carmaker. Honda now forecasts a loss of up to 570 billion yen for the fiscal year ending in March. Previously, the company expected a profit of 550 billion yen. The announcement led to a sharp drop in its US-listed shares during early trading.
The challenges facing Honda reflect a broader trend across the industry. Major automakers including Ford, General Motors, and Stellantis have recorded major EV-related charges. Honda plans to strengthen its position in India and introduce a new long-term business strategy in the coming fiscal year.