Honda Cancels Three EVs for North America and Flags First Annual Loss in Nearly 70 Years as It Pivots to Hybrids
Honda will scrap the Honda 0 SUV, Honda 0 Saloon, and Acura RSX electric vehicles and take up to 2.5 trillion yen in charges, marking the automaker's first annual loss since going public in the 1950s as it shifts resources toward hybrid powertrains.
Honda Motor on March 12 announced it will cancel three electric vehicle models planned for North American production and warned it expects to report its first annual loss in nearly seven decades as a publicly listed company. The decision eliminates the Honda 0 SUV, Honda 0 Saloon, and Acura RSX from the automaker’s lineup before any of the three reached showroom floors, and triggers restructuring charges that could reach 2.5 trillion yen, or roughly $15.7 billion.
The cancellations represent the collapse of an ambitious electrification strategy that Honda unveiled at CES in January 2025, when it presented the 0 Series as the cornerstone of its next-generation EV lineup. Sixteen months later, weakening EV demand in the United States, the expiration of federal EV tax credits, and escalating tariff pressures have forced the company to retreat.
A loss of historic proportions
Honda now expects to lose as much as 570 billion yen for the fiscal year ending March 31, 2026, reversing a previous forecast of 550 billion yen in operating profit. The swing is driven by operating expenses of 820 billion to 1.12 trillion yen tied to the cancelled EV programs, equity method investment impairments of 110 to 150 billion yen, and additional special losses of 340 to 570 billion yen on a non-consolidated basis.
The combined charges across the current and future fiscal years could reach 2.5 trillion yen, making this one of the largest writedowns in the global automotive industry’s history. It places Honda alongside Stellantis, which reported a $26 billion hit on its own EV investments earlier this year, as legacy automakers absorb the cost of electrification bets that have not paid off.
CEO takes responsibility
Honda CEO Toshihiro Mibe told a press conference that the company had little choice. He described the EV market environment as making it “very difficult” to sustain profitability, and said declining demand had rendered the planned production volumes unviable.
“Our first priority is to stop the bleeding,” Mibe said, according to reports from the announcement. “Ultimately, the responsibility lies with me. Precisely because of this, without further delay, and to avoid leaving significant liabilities for the future, I made the agonizing decision.”
Mibe and executive vice president Shinji Kaihara will forfeit 30 percent of their compensation for three months. Other senior executives will take 20 percent pay cuts over the same period.
The hybrid pivot
Rather than pressing forward with battery-electric vehicles, Honda will redirect its engineering and manufacturing resources toward next-generation hybrid powertrains. The company plans to strengthen its hybrid model lineup for the North American market and develop new hybrid technology alongside advanced driver-assistance systems, targeting commercialization after 2027.
Honda is also exploring converting battery production facilities that were intended for EV cells into plants producing hybrid batteries, and plans to expand local component procurement in North America to offset tariff exposure.
The pivot mirrors a broader industry trend. Several major automakers have scaled back or delayed their all-electric ambitions over the past year as consumer preference for hybrids has proven more durable than forecasts predicted. Toyota, which was criticized for years for its cautious approach to full electrification, has seen its hybrid-first strategy increasingly validated by market data.
China and the competitive gap
Honda’s problems extend beyond North America. The company’s sales in China plunged 24 percent in 2025 as domestic manufacturers led by BYD captured market share with software-defined vehicles that Honda’s current lineup cannot match on features or price. The restructuring charges include impairments related to Honda’s Chinese operations, where the company acknowledged it had fallen behind competitors that entered the EV market with purpose-built platforms rather than adapting legacy architectures.
Bernstein analyst Masahiro Akita called the cancellation decision unexpected, noting that the 0 Series had been “positioned as a core model” for Honda’s future. He warned that investors would view the announcement as “a big negative surprise to the market”.
What comes next
Honda said it will provide a detailed mid-to-long-term automobile strategy in May 2026. The company signaled that EVs remain part of its long-term plans but that future electric vehicle programs will be evaluated strictly against profitability benchmarks and market conditions rather than pursued on the basis of volume targets.
The announcement leaves open questions about Honda’s partnership with Sony on the AFEELA electric vehicle, which was originally scheduled for U.S. deliveries beginning in 2026, and about the future of the Honda Prologue, the company’s existing EV that is manufactured by General Motors. Honda did not address either program directly in its March 12 statement.