Honda Shocked Underperformance Of EVs... Forecast to record first deficit since listing in 1950

*This content was translated by AI.

Shares plunged more than 5% as Japanese carmaker Honda is expected to post its first annual deficit in about 70 years since its listing. Honda's stock price closed at 1,368 yen on the Tokyo Stock Exchange on March 13, 2026, down 5.6% from the previous day, and fell to 6.7% at one point during the day. It is the second-largest drop among the Nikkei 225 index's components and the biggest daily fall since early February 2025.

The main reason for this deterioration in earnings is the cost of large-scale restructuring due to the reorganization of the electric vehicle (EV) business strategy. Honda announced that it had lost up to 2.5 trillion yen (about $15.7 billion) as it abruptly canceled production plans for three electric vehicle models that it had planned to target the U.S. market. Of the losses, about 1.3 trillion yen will be reflected in the current fiscal year and the remaining 1.2 trillion yen will be reflected in the next fiscal year's performance.

As a result, Honda cut its full-year earnings forecast as of March 2026 settlement to a net loss of up to 630 billion yen (about $4.3 billion) from a previous 360 billion yen surplus. It is the first time Honda has posted an annual deficit since its listing in the 1950s. The company explained that slowing growth in the global electric vehicle market and deteriorating environment across the industry were the background of the decision.

Poor performance in the Chinese market also hurt its performance. Honda is reevaluating the value of its Chinese business by struggling in competition with software-oriented high-tech vehicles promoted by BYD, a local Chinese company. As a result, significant asset impairment losses are expected to occur in the Chinese business sector. However, core business sectors such as motorcycles are still maintaining solid performance, offsetting some of their company-wide losses, the report showed.

Honda's massive loss announcement clearly shows the crisis facing traditional automakers amid the pace of electric vehicle transition around the world. Investors are paying attention to whether profitability will recover in the future, reacting to massive asset amortization and lower earnings forecasts.

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*This content was translated by AI.