By Kosaku Narioka

Honda on Thursday reported its first annual loss as a listed company -- equivalent to $2.7 billion -- and cited electric-vehicle losses equivalent to about $10 billion after giving up on its main EV plans in the U.S. Here is what went wrong and how the company hopes to turn its fortunes around.

EV writedowns

Honda has canceled plans for three electric cars it had said it would sell in the U.S. -- a sport-utility vehicle, a sedan and a luxury Acura model. It also called off plans to sell EVs in a joint venture with Sony. And Chief Executive Toshihiro Mibe said Thursday that Honda would indefinitely freeze plans for a Canadian project that would have included manufacturing of EVs, batteries and materials.

Mibe said he was abandoning a target he set in 2021, when he said all Honda cars would be EVs or fuel-cell vehicles by 2040.

"We at management are taking this loss very seriously," he said. "It is my biggest responsibility to build a business structure that can withstand whatever may come amid this uncertainty."

China business

Honda's sales in China have fallen by more than half in the past five years owing to intense competition and are losing further ground this year, according to results from the first quarter. In the current fiscal year ending March 2027, Honda expects global car sales to stay largely steady at 3.39 million, offsetting losses in China with gains in North America.

One for the records

Honda first listed its shares on the Tokyo Stock Exchange in 1957. The past fiscal year, which ended in March, was the first time it recorded an annual loss. Honda stock has fallen 14% year to date through Thursday, weighed down by concerns about the impact from the Iran war and U.S. tariffs.

Recovery plan

Honda says its core business of selling gasoline-powered cars remains profitable, similar to other carmakers such as General Motors and Ford that have reported EV-related writedowns. It expects to earn a net profit of more than $1.6 billion in the current fiscal year, despite expected additional EV-related writedowns. The core of its recovery plan: more hybrid gas-electric vehicles for Americans, who have flocked to Toyota's hybrids.

Write to Kosaku Narioka at kosaku.narioka@wsj.com

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May 14, 2026 04:45 ET (08:45 GMT)

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