Honda is waving the white flag. The Japanese automaker previewed two new hybrids set to launch by 2028 after taking an over $9 billion hit over its failed EV bet, leading to its biggest loss in company history.
Honda turns to hybrids after EV pullback proves costly
Honda admitted it was “unable to deliver products that offer value for money better than that of new EV manufacturers, resulting in a decline in competitiveness,” after suddenly announcing plans to cancel three new EVs in the US in March, warning restructuring costs could reach 2.5 trillion yen ($15.7 billion).
After posting its first annual loss since it became a publicly traded company in 1957 on Thursday, Honda’s CEO Toshihiro Mibe revealed the company’s comeback plans.
Honda is no longer planning to phase out gas-powered vehicles by 2040. Instead, Honda now aims “to achieve carbon neutrality by 2050,” including a mix of EVs, hybrids, carbon-neutral fuels, and carbon-offset tech.
Starting next year, Honda plans to begin introducing its next-gen hybrids, underpinned by a new hybrid system and platform. Honda said it aims to improve fuel economy by over 10% in its upcoming hybrids. The new system is expected to help cut costs by over 30% compared to Honda’s current hybrid system.
By the end of the decade, Honda plans to launch 15 new hybrid models globally. In North America, its most important market, the company will introduce larger hybrids in the D-segment or above.
Honda previewed two of the new hybrids during the business update: the Honda Hybrid Sedan Prototype and the Acura Hybrid SUV Prototype, which the company said will go on sale within the next two years.
After canceling plans to build the all-electric 0 Series SUV and sedan (Saloon) and the Acura RSX at its EV hub in Ohio, Honda will reallocate all available space to hybrid and gas vehicle production.
To match the higher output, Honda will convert a portion of the EV battery production lines at its joint venture battery plant with LG Energy Solution to manufacture hybrid batteries. Mibe also confirmed Honda’s plans to suspend its $15 billion EV plant in Ontario indefinitely.
For the fiscal year ended March 2026, Honda’s EV-related losses reached 1.45 trillion yen ($9.2 billion) while operating losses totaled 414.3 billion yen ($2.6 billion).
Honda estimates the total cost of its EV pullback will be 2.5 trillion yen ($15.7 billion). Most of it will be recorded in the upcoming fiscal year. By the fiscal year ending March 31, 2029, Honda said most of the EV-related losses will be resolved.
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