Honda expects nearly $16 billion in costs from its EV rethink, citing US policy changes, tariffs, and market slowdowns as key factors for the strategic pivot.
TOKYO: Honda Motor Co expects to book nearly USD 16 billion in expenses and losses from a major reorientation of its electric vehicle strategy, blaming a shift in US government policy and import tariffs.
The Japanese automaker stated it had believed EVs would be the optimal long-term solution and had shifted its strategic direction toward their popularisation.
It explained that the profitability of its auto business was declining due to the United States government policy shift including the imposition of import tariffs.
The company also pointed to the abolition of US tax incentives for EV purchases and the easing of fossil fuel regulations, as well as a decline in the competitiveness of its products in Asia.
In response to the slowdown of the EV market in North America, Honda decided to cancel the launch and development of certain electric models there.
Resulting expenses and losses related to the reassessment of its EV strategy, including expected losses for the current fiscal year, would be up to 2.5 trillion yen (USD 15.7 billion).
These come from impairment and write-off losses on assets that were intended to be used for the production of these vehicles, the firm added.
It also said it could write down investments in China prompted by intensified competition there.
Honda forecast a net loss of between 420 billion and 690 billion yen for the year to end-March, compared with an earlier profit projection of 300 billion yen.