Honda Reports Billion-Dollar Losses

Honda, like many global automakers, is learning the hard way how costly missteps and overinvestment in the electric vehicle market can be. The Japanese company has already taken significant write-downs related to its electrification efforts and is now repairing the damage after its fourth consecutive quarter of operating losses in the segment.

In the nine months ended Dec. 31, Honda reported 267.1 billion yen ($1.71 billion) in write-downs and charges related to its entry into the electric vehicle market. While the financial hit did not reach the level of Ford’s problems with electric models, it is still a worrying indicator for Honda’s strategy.

The company has shelved several electric models and posted its fourth straight quarter of operating losses. In the first three quarters of the fiscal year, those losses totaled 166.4 billion yen, or $1.07 billion.  Auto News estimates that full-year losses related to electric vehicles could reach 700 billion yen, or about $4.48 billion.

Commenting on the latest financial results, Executive Vice President Noriya Kaihara acknowledged that the company must “conduct a thorough review of our strategies to rebuild our competitive strength.”

Costs could soon rise further as Honda is ending its close collaboration with General Motors on developing electric vehicles. Honda has reportedly reduced the number of vehicles it has ordered from GM and paid the American manufacturer compensation.

Honda announced a goal back in 2024 of selling up to two million electric vehicles per year by 2030. However, the company apparently overestimated global demand, partly due to the change of administration in the US a little over a year ago. According to Kaihara, the company now plans to “significantly revise its future electric vehicle strategy” and is expected to present an updated plan in the near future.

A key part of the new direction will be a renewed emphasis on hybrid models. Honda aims to double hybrid sales to 2.2 million units by 2030, signaling a clear shift from its previous approach focused solely on electric vehicles.

• Also See: Honda Will Go All-In And Stop Producing Fuel Cells With GM