Honda Slamming The Brakes On Electrics

Honda is deepening its retreat from an aggressive electric vehicle rollout, canceling three U.S.-bound EVs and warning that the shifting market could result in major financial losses as it pivots toward hybrids.

The automaker recently announced it will halt development and launch plans for the 0 Series SUV, 0 Series Saloon and the Acura RSX. Those models had been slated for U.S. production as early as this year following factory retooling tied to Honda’s next-generation EV strategy. 

Honda said the decision reflects a rapidly changing business environment, including slower EV demand, tariff pressures and weaker-than-expected product performance in key markets.

“Honda determined that starting production and sales of these three models in the current business environment where the demand for EVs is declining significantly would likely result in further losses over the long term,” the company said in a statement.

The financial impact is substantial. Honda said total losses tied to the move could reach as much as $15.8 billion. That includes operating expenses projected between roughly $5.2 billion and $7.1 billion in the current fiscal year, reversing what had been an operating profit forecast just one month ago into an expected operating loss.

The reversal comes after executives called for a “fundamental review” of Honda’s auto strategy amid mounting EV-related losses. The company’s automotive division has now posted operating losses for four consecutive quarters.

“In the U.S., the expansion of the EV market has slowed down due to several factors including the easing of fossil fuel regulations and revisions to EV incentives,” Honda said. The company added that it has struggled to adapt quickly enough to those changes, putting additional pressure on earnings.

Chief Executive Toshihiro Mibe said the decision to cancel the vehicles is necessary to stabilize the business.

“So first, we have to stop the bleeding. And then we have to think about how to rebuild our business competitiveness and produce results,” Mibe said in a Honda press conference call, during which he also said it was a hard decision to discontinue Honda's planned EVs and one he takes responsibility for making.

Executive Vice President Noriya Kaihara said Honda will redirect its electrification resources toward hybrid vehicles, which are currently seeing stronger consumer demand. A new hybrid powertrain and automated driving system are under development, with commercialization expected after 2027.

In North America, Honda plans to increase local sourcing for components and vehicles tied to its upcoming hybrid lineup. The company is also evaluating whether to shift some battery production capacity from EV batteries to hybrid batteries at its joint venture with LG, and potentially into stationary energy storage.

“We will put our automotive business back on growth trajectory,” Kaihara said, while cautioning that a meaningful recovery is not expected until the fiscal year ending March 31, 2028, when new models and next-generation hybrids are fully launched.

Honda’s challenges extend beyond North America. The automaker acknowledged it has fallen behind competitors in China, particularly in EV cost competitiveness and in-vehicle software. Sales in China dropped sharply last year, further weighing on overall performance.

The company’s struggles reflect a broader industry trend. As  Automotive News points out, automakers worldwide are scaling back EV investments, delaying launches or canceling projects as demand growth cools and incentives change. Honda, however, had been among the most aggressive in committing to an all-electric future, including a goal of phasing out internal combustion engines by 2040.

That ambition now appears to be evolving. Even as Honda continues investing in electrification, it is placing greater emphasis on hybrids as a bridge technology.

To underscore the seriousness of the situation, Mibe and Kaihara will take a 30 percent pay cut for three months, while other senior executives will see compensation reduced by 20 percent over the same period.

According to Automotive News, analysts say the scale of the pullback came as a surprise, particularly given the importance of the 0 Series to Honda’s long-term strategy.

For now, Honda is doing what a growing number of automakers are doing: slowing down, reassessing and shifting resources to where the market is today—not where it was expected to be.

Photo: Honda/Acura.