Due to the failure of its investments in the electric vehicle (EV) market, Japanese automaker Honda experienced its first annual loss in 70 years. Honda reported a total operating loss of ¥423 billion ($2.68 billion: £1.99 billion) for the year ending in March 2026, indicating that demand for EVs has not been as robust as the business had anticipated.
The company announced that it would source parts from China, where prices are lower, to reduce costs, and that it was abandoning some of its EV production targets. It said that changes in US policy, including as the removal of tax breaks for US consumers buying EVs and the application of tariffs, contributed to its losses.
President Donald Trump eliminated tax incentives worth up to $7,500 (£5,500) for US consumers who bought new electric vehicles in September 2025. Even if the tariffs were lowered from 25% to 15% in 2025, his taxes on imported automobiles and auto parts also hurt revenues at a number of significant automakers.
Since going public on the stock market in 1957, Honda has expanded to become the second-largest automaker in Japan. Its enormous size and heritage nature, according to analysts, make it challenging to swiftly adjust to sharp fluctuations in EV demand. Honda announced that it would now focus on expanding its profitable motorbike division, its financial services division, and its hybrid-vehicle production.
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