Honda posts first annual loss in more than 70 years and trims electric car plans
Honda ended the financial year that closed in March 2026 with a loss of 423.9 billion yen, roughly €2.29 billion. It was the company’s first annual loss since its stock market listing in 1957, and the main culprit was not a sudden collapse in the wider business, but a painful reassessment of its electric car strategy.
Euro conversions are approximate and based on the latest European Central Bank reference rate available, 1 euro to 184.83 yen.
Electric car costs pushed Honda into the red
Honda reported an operating loss of 414.3 billion yen, about €2.24 billion, for the past financial year. A year earlier, it made an operating profit of 1.2 trillion yen, around €6.49 billion.
According to Honda’s own financial materials, losses linked to electric cars reached 1.58 trillion yen, about €8.55 billion. Of that, 1.31 trillion yen, roughly €7.09 billion, came in the fourth quarter after the company cancelled the development and launch of planned electric models for North America.
Strip out the electric car related losses, and Honda would have made an adjusted operating profit of 1.04 trillion yen, around €5.63 billion. That rather neatly shows where the wound sits. The problem was not the whole Honda machine. It was the timing and scale of its electric car spending.
Honda walks back its earlier electric car target
Honda chief executive Toshihiro Mibe confirmed that the company is dropping its previous target for electric cars to make up one fifth of new vehicle sales by 2030. Honda is also softening its earlier plan to sell only electric and hydrogen fuel cell vehicles by 2040.
That does not mean Honda is leaving electric cars behind. The company still plans to sell them where demand, infrastructure and market maturity support the case. The difference is that, over the next few years, more development and production resources will move towards hybrids.
Hybrids and motorcycles move into sharper focus
From 2027, Honda will start rolling out a new generation of hybrid models. By the financial year ending in March 2030, it plans to launch 15 new hybrids, mainly in North America. The cost of its new hybrid system should fall by more than 30 per cent compared with the 2023 version.
The wider group was also cushioned by its motorcycle division, which delivered record sales volume and operating profit. Honda sold 22.1 million motorcycles during the year, while car sales fell to 3.4 million vehicles.
Analysis: the issue is timing, not only technology
Honda’s loss does not prove that the electric car market failed. It shows how expensive the transition can become when a manufacturer invests too quickly while demand, subsidies and regulation move at different speeds across different markets.
The irony is familiar. Honda, long admired for engineering patience and mechanical pragmatism, was caught by the economics of haste. Now it is doing what Honda often does best: slowing down, recalibrating and letting the hybrid do the quiet, profitable work while the electric future takes a little longer to arrive.
