Honda Motor Co. reported a significant financial impact from its electric vehicle (EV) strategy and U.S. import duties, leading to a sharp decline in quarterly profits and a strategic reassessment of its electrification timeline. For the nine months ending December 31, 2025, the automaker incurred one-time EV expenses of ¥267.1 billion (approximately $1.7 billion) and an additional ¥279.5 billion ($1.79 billion) in costs due to U.S. tariffs.
Third-quarter earnings plunged 61% year-over-year to ¥153.4 billion. Operating profit for the period sank to ¥591.5 billion from ¥1.14 trillion, with the operating margin falling to 3.7% from 7.0%. The company cited slower-than-expected global EV adoption, trade protectionism, supply chain constraints, and intense competition as primary factors. "The anticipated pace of electrification has not materialized," stated an executive vice president, signaling a reassessment of North American EV rollouts.
In response, Honda is implementing a major strategic shift. The company has reduced its planned electrification spending through fiscal 2031 from ¥10 trillion to ¥7 trillion. Furthermore, Honda has lowered its global EV sales target for 2030 from 30% to around 20% of total sales, pivoting to emphasize hybrid vehicles as a bridge technology. The new target is to sell 2.2 million hybrid units by 2030.
Amid the automotive unit's struggles, which posted an operating loss of ¥166.4 billion, Honda's motorcycle business provided a crucial financial buffer. The division achieved record sales of 16.44 million units in the nine-month period, generating an operating profit of ¥546.5 billion with an 18.6% margin. This strong performance helped stabilize overall earnings and cash flow.
For the full fiscal year ending March 31, 2026, Honda issued a sharply reduced outlook. The company now forecasts operating profit of ¥550 billion, a 54.7% collapse, and net profit attributable to shareholders of ¥300 billion, a 64.1% drop. The automaker is restructuring its North American EV operations, tightening costs, and plans to unveil a new mid-to-long-term strategy by the end of the fiscal year.
