Honda Warns of Massive 10% Correction as Latest Automaker to Pivot Away From EVs

Honda Motor Co. has issued a stark warning of a projected 10% financial hit as it becomes the latest major automaker to scale back its electric vehicle ambitions. The Japanese automotive giant revealed the significant correction during its 2026 strategic update, signaling a dramatic reversal from its previously aggressive EV rollout plans and sending shockwaves through the automotive and investment communities.

Key Takeaways

• Honda said Thursday it expects to post a loss this fiscal year as it shifts focus away from electric vehicles.
• Honda joins other automakers including Stellantis, General Motors, and Ford in pivoting away from EVs.

Another auto giant is pivoting away from electric vehicles amid a number of changes in the U.S. market.

This time it's Honda Motor Company (HMC), whose U.S.-listed shares sank this morning after the Japanese automaker told investors it's pivoting away from electric vehicles, and expects to take a big hit while doing so. The move follows similar announcements in recent months from other automakers, including Stellantis (STLA), Ford (F), and General Motors (GM).

Honda said Thursday that it expects to take on charges of up to 2.5 trillion Japanese yen ($15.75 billion) in its fiscal year ending March 31 as part of the transition. Honda cited the expiration of EV tax credits in the U.S. and President Trump's tariffs as factors in the decision, as they have made it much more difficult to sell cars profitably in the U.S.

Why This Matters to Investors

Several automakers, including Honda, are opting to put more focus on hybrids and traditional internal combustion engine vehicles as demand for EVs in the U.S. has declined in recent months.

Honda now projects a loss of 340 billion to 570 billion yen for the full fiscal year, down from its previous forecast of a 360 billion yen profit when it last reported quarterly results in February. The full-year loss would be Honda's first since starting to report quarterly results in 1977.

The automaker said it will focus on developing more competitive hybrid vehicles, and grow its motorcycle business to improve profitability. Several Honda executives are also giving up 20% to 30% of their monthly pay for three months of the next fiscal year to help compensate for the loss.

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Honda's U.S.-listed shares were down 6% Thursday morning, leaving them down about 12% since the start of the year.