The Japanese Honda (HMC) recorded its first loss in its almost 80-year history, after a change in strategy from electric vehicles, which cost it dearly. But a refocused plan to lean toward hybrids and optimistic forecasts for next year have investors feeling optimistic.
Honda said total electric vehicle-related losses for the fiscal year ending March 2026 amounted to 1.579 trillion yen ($10 billion), leading to an operating profit loss of 414.3 billion yen ($2.625 million).
“Although the automotive business was facing a difficult business environment, including higher tariff burdens and lower unit sales due to factors such as semiconductor supply shortages, we implemented cost reductions across the company as a single team and, excluding electric vehicle-related losses, were profitable,” the company said in its filing.
However, good news came with Honda’s guidance. Although electric vehicle-related losses in the next fiscal year of March 2027 will be 500 billion yen ($3.168 billion), the company still forecasts operating profits of 500 billion yen. This surpassed Bloomberg consensus estimates of 212.4 billion yen ($1.35 billion), sending Honda’s New York-listed ADR shares up more than 2%.
To better serve North America and its main market, the US, Honda said it plans to launch 15 new hybrid models by March 2030, primarily in North America, abandoning planned electric vehicles and opting for vehicles with mixed powertrains. Honda said that by 2029 it would launch “full-size hybrid models” in the D segment, meaning full-size sedans, pickup trucks and SUVs.
Honda also said Thursday it would abandon plans to build an electric vehicle battery supply chain in Canada.
Honda currently has 5 vehicles in its US lineup that offer hybrid powertrains; however, these are of the mild hybrid, non-plug-in variety, offering more range and efficiency. Honda’s only electric vehicle is the Prologue, which is essentially a rebadged Chevrolet Blazer EV, which has been sold at deep discounts at dealerships and will end production in December of this year.
Not surprisingly, Honda is scrapping its goal of going combustion-free by 2040, with a new long-term goal of “carbon neutrality” by 2050, which will include a mix of electric vehicles, hybrids and carbon offsets. This means the company will continue to invest in next-generation EV hardware and platforms for the future, but the company did not disclose these exact outlays.
Tariff impacts remain an obstacle, as Honda manufactures in regions such as Canada, Mexico and Japan, as well as at its main plant in Marysville, Ohio. Honda said tariff expenditures during the last fiscal year amounted to 346.9 billion yen ($2.2 billion).
Pras Subramanian is a senior robo-reporter at Yahoo Finance. You can follow it on unknown and continue instagram.