Honda scraps Honda 0 SUV, 0 Saloon, and Acura RSX EV plans amid strategy reset

Honda Motor Co. says it will cancel the development and planned North American launch of three electric vehicles as part of a broader reassessment of its electrification strategy. The decision is expected to result in significant financial losses for the fiscal year ending March 31, 2026, and has prompted the company to revise its consolidated financial outlook.

The canceled models include the Honda 0 SUV, Honda 0 Saloon, and the Acura RSX electric vehicle, which had been scheduled for production in the United States. According to the company, continuing with the programs in the current market environment would likely result in further long-term losses.

The move reflects a shift in Honda’s approach to electrification amid slower EV demand growth in some markets, increased competitive pressure in China, and declining profitability in parts of its existing vehicle business.

Reassessment of electrification strategy

Honda has previously outlined long-term plans to achieve carbon neutrality across its products and corporate operations by 2050. Electric vehicles were expected to play a major role in that effort, particularly for small-sized mobility products such as passenger cars.

The company had accelerated EV development in response to policy signals in the United States and other markets that encouraged a rapid transition toward battery-electric vehicles. Honda relied on earnings from its gasoline, hybrid, motorcycle, and financial services businesses to support the investment required to develop new EV platforms and technologies.

However, Honda said the operating environment for its automobile division has changed significantly in recent years. The company cited two primary factors affecting profitability. The first is the impact of revised U.S. tariff policies on gasoline and hybrid vehicles. The second is reduced competitiveness for Honda models in parts of Asia after the company shifted more development resources toward EV programs.

In addition to those pressures, the company said the outlook for the EV market has become less certain. In the United States, the growth rate of EV adoption has slowed due to changes in regulatory policies, including adjustments to fossil-fuel regulations and revisions to EV incentives.

China has also emerged as a challenging market. Honda said customer expectations are increasingly centered on software-based features rather than traditional hardware attributes such as fuel efficiency or interior space. The rapid emergence of newer EV manufacturers in China, many of which operate with shorter development cycles and emphasize software-defined vehicles and advanced driver-assistance systems, has intensified competition.

Honda said it has struggled to match the value proposition of some competitors, contributing to declining competitiveness in the region.

Financial impact

As a result of canceling the three EV programs and reassessing investments, Honda expects to record significant expenses and impairment losses in its financial results for the fiscal year ending March 31, 2026.

The company estimates that operating expenses tied to the reassessment will total between ¥820 billion and ¥1.12 trillion (approximately $5.5 billion to $7.5 billion USD, converted at roughly ¥150 per dollar). These costs include write-offs and impairment losses associated with tangible and intangible assets intended for the canceled vehicles, as well as expenses related to halting their development and sales plans.

Honda also expects additional losses from investments in China accounted for under the equity method. These losses are estimated at ¥110 billion to ¥150 billion (about $730 million to $1 billion USD).

Separately, the company forecasts special losses of ¥340 billion to ¥570 billion (approximately $2.3 billion to $3.8 billion USD) in its non-consolidated financial results.

Taken together with potential future expenses linked to the strategy change, Honda said the total losses could reach ¥2.5 trillion, or roughly $16.7 billion USD.

The company emphasized that these figures are preliminary estimates based on information available as of March 12, 2026, and the final numbers may differ when financial results are finalized.

Revised financial outlook

Honda’s updated financial guidance reflects the expected impact of these losses.

The company maintained its projected fiscal-year revenue at ¥21.1 trillion (approximately $140.7 billion USD). However, its profitability outlook has changed significantly. The company now expects operating profit to range from negative ¥570 billion to negative ¥270 billion (roughly –$3.8 billion to –$1.8 billion USD).

Profit before income taxes is projected to range from negative ¥650 billion to negative ¥310 billion (approximately –$4.3 billion to –$2.1 billion USD). Profit attributable to owners of the parent company could range from negative ¥630 billion to positive ¥360 billion, reflecting the wide uncertainty surrounding the financial impact.

The share of profit or loss from investments accounted for using the equity method is forecast to be negative ¥690 billion to negative ¥420 billion (about –$4.6 billion to –$2.8 billion USD).

These revisions represent a sharp decline compared with Honda’s previously announced forecasts and with results from the prior fiscal year, when the company reported operating profit of more than ¥1.21 trillion and net profit of ¥903 billion.

Despite the revision to earnings forecasts, Honda said it will not change its dividend per share forecast for the fiscal year. The company explained that it uses a dividend-on-equity ratio as a key metric for shareholder returns, which allows it to maintain stable dividends even during periods of fluctuating profits.

Shift toward hybrids and regional strategies

Alongside the cancellation of the three EV models, Honda outlined a new direction for its automobile business. The company said it will adjust resource allocation and place greater emphasis on hybrid vehicles, particularly in markets where demand remains strong.

In the United States, where EV market growth has slowed, Honda plans to strengthen its hybrid lineup. Hybrids have historically played a major role in the company’s electrification strategy and have benefited from decades of development work.

Regionally, Honda will also focus on expanding its lineup and improving cost competitiveness in India, where the company expects market growth to continue. Other Asian markets will receive additional hybrid models as Honda reassesses the distribution of development resources.

The company also said it will implement structural changes to improve cost efficiency. This includes establishing a fixed-cost structure better suited to the scale of its business.

Although EV development will continue, Honda indicated that future programs will be introduced more gradually and with greater attention to profitability and market conditions.

Leadership response

In response to the financial impact of the strategy reassessment, several Honda executives will voluntarily return a portion of their compensation.

The company said the president and representative executive officer, along with the executive vice president and representative executive officer, will return 30 percent of their monthly compensation for three months. Members of the executive council and managing executive officers involved in automobile operations will return 20 percent of their monthly compensation for three months.

In addition, the president and executive vice president will forfeit their short-term performance-linked compensation for the fiscal year ending March 31, 2026. Honda said the measures will reduce the annual compensation of its representative executive officers by approximately 25 percent to 30 percent compared with standard levels.

Next steps

Honda said it will provide additional details about its revised mid- to long-term strategy for the automobile business at a press conference planned for May 2026.

The company indicated that the strategy will focus on rebuilding competitiveness while adapting to changing market conditions and technology trends. In the near term, improving the profitability of the automobile business and leveraging the earnings power of its motorcycle and financial services divisions are expected to be key priorities.

The reassessment marks one of the most significant adjustments to Honda’s electrification plans in recent years and reflects the broader uncertainty surrounding the global EV market and the competitive pressures facing traditional automakers.