Honda Motor expects to incur expenses and losses of up to US$15.7 billion due to reassessment of its electric vehicle strategy, and expects an annual net loss this fiscal year. Honda Motor announced on Thursday that it expects to record related expenses and losses of up to 15.7 billion US dollars due to re-evaluation of its electric vehicle strategy, and therefore expects to turn into an annual net loss this fiscal year.
Exterior view of a Honda store, with the Honda logo prominently displayed on the building and several cars parked in front. Honda is canceling the launch and development of some models due to the slowdown in the North American electric vehicle market.
The Japanese automaker said charges and losses related to the revaluation of its electric vehicle strategy could total up to 2.5 trillion yen in the fiscal year ending March 31 and in the coming years. Its global rivals have issued downbeat outlooks in recent months.
Honda said that in view of the slowdown in the North American electric vehicle market, it has decided to cancel the launch and development of some models. At the same time, due to intensified competition in the Chinese market, the company is expected to make impairment losses on its investments in China.
The Japanese automaker's reassessment of its electric vehicle strategy comes after several rivals have already scaled back their electric vehicle operations -- and many U.S. consumers are still reluctant to buy pure electric vehicles.
Jeep parent company Stellantis announced in February this year that it would set aside approximately US$26 billion in expenses; Ford set aside US$19.5 billion in losses last December; General Motors announced in January that it would set aside US$6 billion in expenses.
Honda on Thursday forecast a net loss of between 420 billion and 690 billion yen for this fiscal year, compared with its previous forecast of a net profit of 300 billion yen. The company maintained its full-year revenue forecast of 21.1 trillion yen unchanged.
Honda said some executives will take voluntary salary cuts next fiscal year. Chief executive Toshihiro Mibe will take a 30% pay cut for three consecutive months.
Honda said it plans to strengthen hybrid models to increase the profitability of its automobile business, and rely on the solid earnings of its motorcycle and financial services businesses to continue to provide stable returns to shareholders.
Last month, the Japanese automaker reported a loss in its auto business in the quarter ended in December, hurt by U.S. tariffs and EV-related impairments, despite rising profits at its motorcycle business.