Honda, one of Japan’s largest automakers, reported a net loss of ¥403.3 billion ($2.6 billion) for the fiscal year ending in March, marking the first loss since the company was first listed on the stock market in 1957, according to CNN and BBC reports.

EV Strategy Writedowns and Market Shifts

The company attributed the loss to a 1.6 trillion yen ($10 billion) writedown on its electric vehicle (EV) investments; this significantly reduced what would have otherwise been a potential $7.4 billion profit, according to CNN. Analysts noted that Honda had previously expected a rapid shift to EVs but had to adjust after demand did not meet projections.

Chief executive Toshihiro Mibe announced that Honda would abandon its previous targets for EVs to make up a fifth of new car sales by 2030 and for all vehicles to be electric by 2040, according to BBC. The company also expects ¥512 billion in EV-related losses in the next financial year ending March 2027.

Policy Changes and Market Competition

The Trump administration’s changes to US emissions rules and the elimination of a $7,500 tax credit for EV buyers contributed to the shift in strategy; EV sales in the US dropped sharply after the tax credit was removed in September 2023. Despite recent increases in gasoline prices due to the US-Israel war with Iran, demand for EVs has not risen as expected, according to CNN and BBC reports.

With the Trump administration scrapping stricter emissions rules and removing financial penalties for automakers, Honda and other companies returned focus to gasoline-powered trucks and SUVs, where they earn the highest profit margins. This shift. However, has come at a cost, with automakers forced to write down the value of their large-scale EV investments, according to CNN.

Broader Industry Trends

Honda is not alone in its struggles. General Motors reported a $7.2 billion charge in 2025 for its pullback in EV efforts, while Ford announced a $17.4 billion charge for the same period. Stellantis, which includes Jeep, Ram, Dodge, and Chrysler, reported a charge of 25.4 billion euros ($29.7 billion), according to CNN.

For Japanese automakers, the outlook has darkened sharply. Honda forecast a fiscal 2025 net loss of between ¥420 billion and ¥690 billion, potentially marking its first annual loss since listing publicly in 1957, according to South Korea’s Nate. In response. Honda has shifted its strategy to focus on its motorcycle business, hybrid vehicles, and financial services, with North America, Japan, and India identified as priority markets.