(March 12): Honda Motor Co expects charges of up to ¥2.5 trillion (US$15.7 billion or $20 billion) as it rethinks its electric vehicle (EV) strategy, with the Japanese carmaker joining a growing list of global brands battered by the unravelling EV transition.
The carmaker said Thursday that it will cancel the development and launch of three EV models that had been planned for North America. Honda forecasts losses for the fiscal year ending March will be between ¥270 billion and ¥570 billion.
Just last month Honda had warned of surging expenses related to its EV business, but the latest announcement lays bare the immense cost of being caught out by slowing demand for new-energy cars. Its estimate puts it alongside Stellantis NV, which is taking more than €22 billion (US$25 billion or $32.4 billion) in charges mainly linked to reversing course in its EV strategy, and Ford Motor Co’s US$19.5 billion ($24.87 billion) hit from its overhaul.
The impact may also risk spilling over into the new fiscal year that starts next month, according to Iwai Cosmo Securities analyst Taku Sugawara. “It’s not certain that Honda can reconcile these losses this fiscal year, or whether they’ll spill into the next,” he said.
Honda said its auto business has struggled in light of US tariffs and a loss of its competitive edge in Asia, particularly in China where Honda said it expects to incur an impairment loss on investments.
Carmakers globally have struggled after Europe backed away from an aggressive timeline for phasing out gas guzzlers and the US hollowed out fuel economy and emissions standards — removing a key pillar of support for demand.
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Meanwhile, foreign automakers have rapidly lost ground in China as consumers flock to domestic brands they view as better able to meet their needs. BYD Co has led the charge there and last year became the world’s biggest EV maker.
Honda said that it’s looking to strengthen its hybrid vehicle lineup by reallocating resources and streamlining models in light of the slowdown in North America. It’s also aiming to enhance its business in India, which is a growth market both for cars and motorcycles.
The company will announce a revised mid- to long-term business strategy during the next fiscal year.
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