Honda Faces $15.7 Billion Loss as it Shifts Away from EVs
Authored by Rob Sabo via The Epoch Times (emphasis ours),
A reconsideration of Honda Motor Co., Ltd.’s corporate electric vehicle (EV) strategy and the decision to cancel three EV models for the North American market could result in losses of approximately $15.7 billion for the fiscal year ending March 31, according to a news release from the company on March 12.
This would mark the first time Honda has reported an annual loss since its shares were listed on the Tokyo Stock Exchange in 1957.
Honda explained that it had shifted its manufacturing plans towards electrification in response to significant policy changes in the United States advocating for widespread adoption of EVs, particularly in smaller passenger vehicles, as a long-term solution for achieving carbon neutrality.
Despite its progress in EV adoption leveraging existing gasoline and hybrid vehicle businesses, Honda had to reassess its automobile electrification strategy due to recent changes in the EV business environment that impacted profitability. Factors such as a decline in operating profit and the effects of tariff policies contributed to Honda’s decision.
Additionally, economic pressures in Chinese and other Asian markets from new EV manufacturers offering software-laden vehicles aligned with changing consumer demands, along with the expiration of a federal tax credit on new electric vehicle purchases, led to reduced consumer demand for EVs in the U.S.
While Honda remains committed to carbon neutrality, the company announced the cancellation of the Honda 0 sport utility vehicle, 0 Saloon, and Acura RSX models. These decisions were influenced by challenges in the business environment and declining profitability of gasoline and hybrid models.
As a result of these factors, Honda’s stock experienced a nearly 6 percent decline in intraday trading, with a cumulative drop of over 22 percent in the past six months.
Similar challenges have been faced by other automobile manufacturers, such as Ford Motor Company, which announced a $19.5 billion writedown after discontinuing several EV models due to diminishing demand.