Honda forecasts a $4.3 billion loss in 2026, slashing EV plans due to weak demand, tariffs, and policy changes.

Due to a significant strategic change in its electric vehicle plans, Honda anticipates a net loss of 420 billion to 690 billion yen ($4.3 billion) for the fiscal year ending in March 2026, reversing a previous profit forecast. Citing weakened demand, new U.S. import tariffs, the removal of federal EV tax incentives, and loosened fossil fuel regulations, the company is canceling the development and launch of several EV models in North America. These modifications resulted in possible write-downs on investments in China as well as impairment and write-off losses on EV-related assets. Honda is keeping its long-term objective of switching to EVs and fuel cell vehicles by 2040, but it is cutting its EV investment through 2030 to 7 trillion yen from 10 trillion and its 2030 EV sales target to about 20% from 30%. Honda intends to import American-made cars for sale in Japan, and the CEO and executive vice president will forfeit thirty percent of their salary for three months.