Honda $HMC will cancel development and production of three electric vehicles it had planned to build in North America, the company announced Thursday, as it reassesses its strategy in the face of weakening EV demand and tariff-related pressures.
The Japanese automaker cited slowing EV demand, U.S. tariff pressure, and lost ground in China as it pivots back toward hybrids
Brandon Bell/Getty Images
Honda $HMC will cancel development and production of three electric vehicles it had planned to build in North America, the company announced Thursday, as it reassesses its strategy in the face of weakening EV demand and tariff-related pressures.
The three canceled models are the Honda 0 SUV, Honda 0 Saloon, and Acura RSX. Honda said proceeding with the launches in the current environment — where EV demand is declining — would likely deepen losses over time.
The move will result in Honda recording its first annual net loss since the company went public in 1957, according to The New York Times. The total cost of the strategic reversal, including write-offs, asset impairments, and cancellation-related expenses, could reach 2.5 trillion yen — approximately $15.7 billion — across this fiscal year and future periods, The Times reported. Honda also expects to record an impairment loss on equity-method investments in China.
Honda cited several forces driving the decision. In the U.S., the rollback of EV incentives and the easing of emissions regulations have slowed market growth. In China, the rise of software-defined vehicles from newer domestic manufacturers has eroded Honda's competitive position. U.S. tariff policies have further squeezed the profitability of its gasoline and hybrid lineup.
"In the U.S., the expansion of the EV market has slowed down due to several factors, including the easing of fossil fuel regulations and revisions to EV incentives," Honda said in a statement.
Going forward, Honda said it will shift resources toward hybrid models and work to cut its fixed-cost base. Plans for future EVs will proceed on a longer timeline, contingent on market conditions and profitability. The company said it plans to provide more detail on its revised mid- to long-term strategy at a press conference in May.
In a gesture tied to the revised financial outlook, Honda's president and executive vice president will forfeit their short-term performance bonuses for the current fiscal year. Several other senior executives will voluntarily return a portion of monthly compensation for three months. The company said the annual pay of its top representative officers will fall roughly 25% to 30% from standard levels as a result.
Honda said it does not plan to revise its dividend forecast for the current fiscal year despite the earnings revision.
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