Honda Reports $9 Billion Loss From Electric Car Changes

Honda lost $9 billion on its electric car plans, a big change from previous goals. This is a major financial hit for the company.
By Newsroom | Business, Automotive |

Honda Motor Co. logged its first annual loss, a significant financial reckoning amplified by a $9 billion charge related to its electric vehicle (EV) endeavors. The Japanese automaker disclosed this figure on February 10, 2026, pointing to a substantial reevaluation of its EV strategy, particularly in key markets like China and the United States.

Executive Vice President Noriya Kaihara articulated a stark assessment of the company's EV performance in China, stating that current offerings lack the competitive edge in pricing and user experience against local manufacturers. This has prompted a fundamental shift, necessitating a drastic overhaul of Honda's EV approach in the U.S., a market showing clear signs of deceleration. The previous plans for China have been abandoned. To bolster its standing, Honda intends to "fully tap local suppliers," a move aimed at enhancing cost-effectiveness and market responsiveness.

Read More: Applied Materials Q4 Earnings Beat Due to AI Chip Tool Demand

The company also highlighted ongoing concerns regarding supply chain stability, specifically mentioning potential risks associated with rare earth elements and memory chips. While a weaker yen and a reduced estimated tariff burden were cited as factors that could positively impact full-year earnings, Honda maintained its profit guidance unchanged. This cautious stance appears influenced by increasing competition within Asian car markets, a dynamic that continues to exert pressure on profitability.

This financial downturn for Honda arrives as other major automotive players grapple with their own strategic adjustments. Notably, Stellantis reported a substantial $26 billion financial impact, the largest among Detroit's three major automakers, stemming from its decision to pivot away from an aggressive electrification agenda. This cost is reportedly linked to restructuring production targets and scaling back on EV commitments. Stellantis had previously entered into a joint venture with battery maker LG Energy Solution for battery production in Canada. The expenses incurred by Stellantis in "de-electrifying" are said to be nearly equivalent to the combined costs of Ford and General Motors in similar restructuring efforts.

Read More: US Electric Car Sales Drop While Global Sales Rise Due to Fuel Prices

Frequently Asked Questions

Q: Why did Honda report a big loss on February 10, 2026?
Honda reported a $9 billion loss because it had to change its plans for electric cars, especially in China and the US.
Q: What went wrong with Honda's electric cars in China?
Honda said its electric cars in China were not good enough compared to local brands in price and features. They have stopped their old China plans.
Q: How will Honda change its electric car plans in the US?
Honda needs to change its electric car strategy for the US because the market is slowing down. They will use more local suppliers to make cars cheaper.
Q: What other problems is Honda facing?
Honda is also worried about getting enough rare earth metals and computer chips for its cars. Competition in Asia is also making it harder to make money.
Q: How does this compare to other car companies?
Stellantis also had a big cost, about $26 billion, because it decided to slow down its electric car plans. This shows many car companies are finding it hard to switch to electric.