Honda’s EV Bet Bites Back, Dragging the Carmaker Into Its First Annual Loss in Decades

The New York Times, Reuters, the Financial Times, the Wall Street Journal, Bloomberg, and AP contributed to this report.

Honda just logged a rough one. The Japanese automaker posted its first annual loss since going public in 1957, taking a 423.9 billion yen hit as its electric-vehicle reset turned into a multibillion-dollar mess. Reuters said the company’s EV-related losses were about 2.5 trillion yen, or roughly $16 billion, across the last fiscal year and the one just started.

The headline result was ugly, but the bigger shock is how far Honda has pulled back. Chief Executive Toshihiro Mibe scrapped the company’s long-term EV sales goals, including a target for EVs to make up 20% of new sales by 2030 and a full switch to electric or fuel-cell vehicle sales by 2040. Honda also indefinitely suspended its planned $11 billion Canada EV project.

For investors, the market’s reaction was almost backwards. Honda shares rose 3.8% after the company said it would keep its annual dividend at 70 yen per share and return at least 800 billion yen to shareholders over three years. The company also projected 500 billion yen in operating profit for the current fiscal year, helped by cost cuts and a still-healthy motorcycle business.

That motorcycle business is doing the heavy lifting. Honda said strong sales in India and Brazil helped its two-wheeler unit post record volume and profit, even as car sales softened in markets like China. The company sold 22.1 million motorcycles last year, compared with 20 million the year before, while global vehicle sales slipped to 3.4 million from 3.7 million.

Honda is not giving up on electrification altogether, but it is clearly backing away from the all-in version of the plan. The company now says it will keep working on EV batteries and other future tech while also leaning more on hybrids and regular gasoline models.

The message from Mibe was basically: the detour is real, but the comeback is next. He said he wants to push through the revival plan before thinking about stepping aside.