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Honda expects full-year loss from $15.7b EV costs
Honda warned it will record a loss of up to 570 billion yen (US$3.6 billion) in the year ending March, following higher EV restructuring costs.
It also expects up to 2.5 trillion yen (US$15.7 billion) in expenses and losses over several financial years as part of its strategy shift.
Toshihiro Mibe, CEO, said the company will scrap development of some planned EV models and shift focus to hybrids as demand for hybrids has risen in the United States and elsewhere.
The new guidance reverses an earlier forecast for a 550 billion yen (US$3.4 billion) profit.
Mibe and Noriya Kaihara, executive vice president, will voluntarily forego the equivalent of 30% of their compensation for three months, and some other executives will voluntarily forego 20%, the company said.
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Implications, context, and why it matters.
Honda’s EV write-down comes after key US deals fell apart
- Honda pulled back from EV plans after General Motors (GM) scrapped an October 2023 agreement to co-develop lower-cost EVs planned to start in 2027 1.
- The split echoed the end of the companies’ fuel cell project, which will close its Michigan facility before the end of 2026 after GM left hydrogen fuel cell development to focus on batteries, charging technology and EVs 2.
- Honda will take full ownership of its Ohio battery plant from LG Energy Solution, a major South Korean battery maker, while LG Energy Solution shifts attention toward the stationary energy storage market 3.
Honda moves from EV bets toward hybrids that earn money now
- Honda is redirecting spending away from long-horizon EV projects and toward nearer-term earnings from established hybrid technology 4.
- The plan includes cutting intended electrification investment by 53 trillion yen through fiscal year 2031, plus rolling out 13 next-generation hybrid electric vehicle (HEV) models worldwide over four years starting in 2027 4.
- Other established automakers are also leaning on hybrids as a money-making step for the next decade, as EVs remain costly to build and demand stays uncertain 5.
Recent Honda developments
🔗 Source: Reuters
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