Honda cancels three electric models in the US and records billion-dollar losses in strategic turnaround

A Honda Motor Co. announced the cancellation of the development and launch of three electric models planned for production in América from Norte. The decision is part of a reassessment of the company’s electrification strategy, motivated by the slowdown in the electric vehicle market in the Estados Unidos. The automaker expects to record between $5.2 billion and $15.7 billion in losses associated with this move, which is expected to lead to a net annual loss for the first time in decades as a listed company.

The company attributes the adjustment to factors such as reduced demand for EVs in the American market, influenced by the relaxation of regulations on fossil fuels and changes in tax incentives. Honda also highlights difficulties in maintaining competitiveness in regions like Ásia, where resources directed towards EVs have impacted other segments. The restructuring seeks to improve the profitability of the automotive business in the short term.

Cancellation of specific models

Honda decided to interrupt the projects of the Honda 0 SUV, the Honda 0 Saloon and the Acura RSX. Esses vehicles were part of the 0 series, positioned as central to the software-defined vehicle strategy. Production was expected to take place at facilities in the Estados Unidos, with launch initially planned for next year.

The automaker concluded that beginning production and sales of these models in the current environment would result in additional losses over time. The measure reflects rapid adaptation to evolving market conditions.

Challenges in the hybrid line

Honda pioneered the sale of hybrids in the Estados Unidos with the Insight, launched before the Prius and the Toyota. Atualmente, the company offers only four hybrid models, while competitors have significantly expanded this offering.

Despite the goal of doubling hybrid sales by the end of the decade, Honda announced a reduction in hybrid production in the Estados Unidos this year. Modelos like the Prelude, reintroduced as an exclusive hybrid, recorded modest sales, with just 299 units sold last month.

The absence of hybrid options in pickup trucks, minivans and larger SUVs limits the brand’s presence in high-demand segments. The company plans to strengthen this category with new hybrid powertrains and automated driving systems expected after 2027.

Impact on sales and the American market

The Estados Unidos market represents the main source of revenue for Honda. Sales in the country grew just 0.5% last year, a performance below the sector average. The Prologue, an EV launched in 2024 in partnership with GM, saw sales fall 64% in the last reported month, influenced by the loss of federal subsidies in September.

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The aging lineup contributes to the challenges, with problems that predate the move towards EVs. The reorganization integrates vehicle development with research and development to create more competitive products.

Global context and regional adjustments

Honda faces stagnation at China, with sales declining for 24 consecutive months. Globalmente, sales peaked at 5.3 million units in 2019, but fell to 3.7 million last year and a projected 3.3 million in the current fiscal year.

The company intends to reallocate resources to strengthen hybrids in key markets, including Japão and Estados Unidos. Na Índia and elsewhere in Ásia, the focus will be on expanding the lineup and improving cost competitiveness with next-generation hybrid models.

Measures for financial recovery

Executives at Honda, including CEO Toshihiro Mibe, accepted voluntary pay cuts for three months. The company maintains investments in other profitable areas, such as motorcycles and financial services, to offset losses in the automotive segment.

The revised strategy emphasizes capturing positive effects from the introduction of new models and advanced hybrids in the Estados Unidos from 2027. The Honda also considers adjustments in local joint venture battery production to prioritize hybrids.

The automaker remains committed to electrification, but adapts the pace to market realities. The reassessment seeks to balance innovation with financial sustainability in a volatile demand scenario.