Honda suffers its first loss in nearly 70 years, pressured by the costs of electric cars.

In December 1957, nine years after starting operations, Honda went public on the Tokyo Stock Exchange. And since then, its journey as a listed company has invariably had one destination: the bottom lines of its balance sheet stained blue.

This uneventful run of nearly 70 years was interrupted, however, on Thursday, May 14, when the Japanese automaker reported its first annual loss in its history as a publicly traded company, of 423.9 billion yen (US$2.7 billion), in the fiscal year ended March 31.

In line with an argument that has been used by many of its peers in the sector, Honda emphasized that the electric car category was the main culprit behind the scenario that led to this loss.

In this regard, the company highlighted factors such as the high costs brought about by its strategy in this race, as well as factors such as US government policies, which included issues such as the imposition of tariffs and the elimination of tax incentives for the purchase of electric vehicles.

Based on this scenario, the automaker had already projected in March of this year that losses related to its operations in this segment would amount to 2.5 trillion yen (US$16 billion), taking into account the fiscal year that has just ended and the current fiscal year.

At the time, Honda began to recalculate this roadmap, announcing the end of production for several models. Among them was the Honda O Series SUV, which had been unveiled at the end of 2025, with the prospect of global production starting between 2026 and 2027.

At the same time, the company suspended plans to sell luxury electric cars in a joint venture with Sony. And it announced that it would focus its efforts on the hybrid electric vehicle category.

On Thursday, when releasing its annual report, it announced new measures that reinforce this slowdown in the first category, with the announcement that it will indefinitely freeze plans for the development of a factory in this segment in Canada, which foresaw an investment of US$ 15 billion.

According to The Wall Street Journal , the company also stressed that it is abandoning its 2021 goal that all cars in its portfolio would be electric or fuel cell powered by 2040.

“We in management are taking this loss very seriously,” said Toshihiro Mibe. “It is my greatest responsibility to build a business structure that can withstand anything that may arise amid this uncertainty.”

While trying to reverse this trend, Honda has also been facing the impacts of its operations in China, given the local competition. In that country, its sales have fallen by more than half in the last five years. And, according to preliminary data from the first fiscal quarter, this loss is intensifying.

Contrary to this bad news, the strong performance of the motorcycle division helped to partially offset the impacts on the automobile business. This contributed to the company closing the period with revenue of 21.7 trillion yen (US$138 billion), a year-on-year increase of 0.5%.

With a recovery plan focused on hybrids, the automaker expects to end the current fiscal year, which will end in March 2027, with a net profit of 260 billion yen (US$1.6 billion) and with sales virtually stable at 3.39 million vehicles.

Honda's shares closed today's trading session in Tokyo up 3.77%, valuing the company at 5.1 trillion yen (US$32.5 billion). However, by 2026, the shares are projected to have depreciated by more than 15%.