Honda Motor expects charges of up to Y2.5tn ($15.75bn) as it revises its electrification strategy and cancels three planned electric vehicle (EV) models.
The Japanese carmaker has decided to stop the development and the planned US launch of the Honda 0 SUV, Honda 0 sedan and Acura RSX amid a slowdown in demand.
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According to the company, initiating production of these models could lead to losses over the long-term.
Instead, it will now shift focus towards strengthening its hybrid line-up.
The move follows what Honda described as a reassessment of its electrification strategy in response to shifts in the business environment.
The automaker said the decision will affect its consolidated financial results for the fiscal year ending 31 March 2026 and has led the company to revise its earlier forecast.
Honda now expects losses for the fiscal year ending March to range between Y270bn and Y570bn.
The company said the review reflects several pressures on its automotive business.
These include the effect of changes in US tariff policies on petrol and hybrid vehicles, as well as weaker competitiveness in Asia after resources were increased for EV development.
Honda also pointed to slower growth in the US EV market, citing factors such as relaxed fossil fuel regulations and changes to EV incentives.
In China, the company said rivalry has intensified as buyers increasingly favour software-based vehicle functions, including software-defined vehicle (SDV) technologies and advanced driver-assistance systems (ADAS).
Honda said newer EV makers have moved faster, with shorter development cycles, and that it was unable to offer better value for money in that market, contributing to declining competitiveness.
It expects write-offs and impairment on assets tied to producing the cancelled models, alongside additional costs linked to halting development and sales.
The company further noted it has reassessed recoverability of equity-method investments in China and anticipates an impairment loss.
It also plans to improve its model lineup and cost competitiveness in India and other Asian markets while continuing long-term electrification efforts.
