Honda Lost $9 Billion On EVs. Now, It’s Betting On Hybrid SUVs And Sedans

• Honda has canceled its long-term EV sales target, as well as the target to shift to a fully electric or fuel-cell vehicle portfolio by 2040.
• The decision comes after the Japanese automaker’s first annual loss in nearly 70 years.
• Hit by more than $9 billion in restructuring costs related to its EV business, Honda will focus on ultra-efficient hybrids.

Honda, Japan’s second-largest car manufacturer and the go-to example for how to run a car business, has hit a rough patch for the first time since going public in 1957. The automaker posted its first annual loss (for the fiscal year ending in March) in nearly 70 years after having to contend with a $9 billion bill for misreading the EV market.

The industry giant has canceled its long-term EV sales targets, scrapping its goal of having EVs make up a fifth of its new car sales in 2030. The planned shift to a full electric or fuel-cell vehicle lineup by 2040 has also been canceled, with the company focusing on hybrid models going forward.

Photo by: Honda

Additionally, Toshihiro Mibe, Honda’s CEO, confirmed that the company will indefinitely suspend its $11 billion Canadian EV project, where cars and battery packs were supposed to be built. If completed, it would have been Honda’s biggest investment in Canada ever.

As a reminder, Honda poured billions of dollars into the bespoke 0 Series platform, which underpinned three initial electric cars: the Honda 0 Series SUV, Honda 0 Series Saloon, and Acura RSX. All three were canceled before a single car rolled off the production line.

Now, Honda is shifting its focus to hybrids, and—thanks to its booming motorcycle business and extensive cost-cutting measures—expects to turn a profit once again by the end of this year.

Honda Hybrid Sedan Prototype and Acura Hybrid SUV Prototype

Photo by: Honda

The first two new hybrids will debut in 2028, based on a new platform and powered by a next-generation hybrid setup that Honda claims will be the “world’s most efficient powertrain.” According to the Japanese automaker, the new lump is designed to improve efficiency by more than 10% over the current technology that debuted in 2023.

During a business briefing, Honda showed a four-door sedan, as well as a crossover, both being billed as concepts. The sedan was wearing the Honda logo, while the SUV had an Acura badge, and there’s no denying that their shapes are quite similar to the discontinued 0 Series Saloon and RSX crossover. Both are coming to the United States, judging from the orange side markers, but they’re only the beginning.

By March 2030, Honda wants to launch no fewer than 15 models with its new hybrid powertrain, with the U.S. getting most of them. Considering the U.S. focus, it’s no surprise that the majority of Honda’s new hybrids will be all-wheel drive SUVs. To get the ball rolling, the automaker will invest 4.4 trillion yen (nearly $28 billion at current exchange rates) in developing new gas and hybrid models within the next three years. Meanwhile, the development of future EVs, most of which will probably be sold overseas, will get just $5 billion.