Honda Motor Reports First Annual Loss in 70 Years Amid EV Restructuring

Tokyo. Japanese auto manufacturer Honda Motor has incurred a loss. The company has announced that it is incurring an annual loss for the first time in approximately 70 years since being listed on the stock market. The company stated that it has suffered a huge financial loss due to expenses exceeding $9 billion for the restructuring of its electric vehicle (EV) business. 

This is the first time Honda has announced such an annual loss since being listed on the stock market in 1957. It has been analyzed that this shows how risky it is for traditional auto manufacturers to aggressively invest in the EV sector while dealing with weak demand.

Company Chief Executive Officer Toshihiro Mibe has said that Honda has abandoned its goal of making EVs 20 percent of new car sales by 2030. Furthermore, the plan to convert all sales to electric or fuel-cell vehicles by 2040 has also been canceled. Honda has indefinitely postponed the proposed $11 billion project for EV and battery production in Canada. 

This was planned to be the largest investment by the Japanese company in Canada. According to analysts, Honda's profitable motorcycle business is helping the company maintain cash flow and shareholder returns, while the auto business has not yet been able to compete.

James Hong, head of mobility research at Macquarie, commented that Honda's strategic implementation is too slow. He also stated that the plan to use more local parts from China is not new. 

In the fiscal year ending March, Honda's operating loss reached 414.3 billion yen, while the company had made a profit of 1.2 trillion yen in the previous year. The company stated that the total loss related to the EV business reached 1.45 trillion yen in the business year ending March. An additional 500 billion yen is estimated to be spent in the current fiscal year.