Honda Motor Co. Ltd. said Thursday, March 11, it is scrapping three planned electric vehicle models for North America in a dramatic strategy reset that could saddle the Japanese automaker with losses of up to JPU2.5 trillion (around USD16–billion).
The company said in a statement that it will cancel development and market launch plans for the Honda 0 SUV, Honda 0 Saloon, and the Acura RSX, citing weakening EV demand and mounting competitive pressure in key markets.
The move underscores growing turbulence in the global electric vehicle transition, as automakers recalibrate investments after years of aggressive spending.
Honda said it now expects to book operating expenses of JPY820 billion to JPY1.12 trillion in its fiscal year ending March 2026, largely from asset write-offs and development costs tied to the scrapped EVs. The company will also record JPY110 billion to JPY150 billion in losses linked to equity investments in China and JPY340 billion to JPY570 billion in special losses in non-consolidated results.
Combined with potential future charges, the total financial impact could reach JPY2.5 trillion, according to preliminary estimates.
The strategic shift comes as Honda’s profitability has weakened. The company cited new US tariffs hitting gasoline and hybrid vehicles, as well as declining competitiveness in Asia after resources were heavily diverted toward EV development.
At the same time, the EV market itself has cooled in the US as fossil-fuel regulations ease and government incentives are revised, slowing adoption.
Competition has also intensified in China, where buyers increasingly prioritize software-driven features such as advanced driver-assistance systems, an area where newer EV makers have moved faster than legacy automakers.
Rather than abandoning electrification, Honda said it will rebalance investments toward next-generation hybrid vehicles while monitoring EV demand.
The company also plans to expand models and improve cost competitiveness in growth markets such as India, while relying on its strong motorcycle and financial services units to stabilize earnings.
Honda will outline its revamped long-term auto strategy at a press conference in May.
