Significant losses for Honda are anticipated following the decision to cancel three electric vehicle models that were in development for the North American market.
Reports suggest that the losses could amount to 690 billion yen (approximately 3.8 billion euros).
The Japanese manufacturer has been forced to reassess its electrification strategy, driven by a shift in the business environment and a notable decrease in demand for electric vehicles in the United States.
This strategic shift is part of a broader analysis in response to the reduction in interest in electric cars, especially in the U.S. market.
Honda estimates that the total financial impact could reach 2.5 trillion yen (about 15.7 billion dollars), considering restructuring costs and previously made investments.
With this change of course, Honda has decided to prioritize hybrid vehicles, canceling the production of three planned electric models for the United States.
The company emphasizes that this decision responds to market variants and the need to adjust resources.
In its latest statement, Honda reported that it expects to record net losses of up to 690 billion yen in the fiscal year ending in March.
This would be the first time the company, founded in Tokyo, reports net losses since it began trading on the stock exchange.
The president of Honda, Toshihiro Mibe, along with the vice president, Noriya Kaihara, have opted to reduce their monthly salary by 30% during the last months of the current fiscal year as a measure to address the financial situation.
Projections of electric models
The company’s new projections anticipate net losses of between 420 billion and 690 billion yen, which could mean a total of 2.5 trillion yen in losses if the reassessment of its electric vehicle strategy is considered.
The canceled models, including the Honda 0 SUV, the Honda 0 Saloon, and the Acura RSX, were to be produced at the Ohio, U.S. plant. However, the low demand for these vehicles has led the company to reconsider its plans.
To improve its financial results, Honda has analyzed multiple options, ultimately deciding on the cancellation of these electric models.
The firm also plans to strengthen its focus on hybrids and rethink resource allocation in response to the slowdown of the electric market in the United States. The company announced that it will provide more details at a press conference scheduled for May.
In summary, the losses projected by Honda reflect the current challenges in the transition towards more sustainable mobility, where innovation must be carefully balanced with demand and business profitability.
