Honda Motor posted its first-ever annual loss this week. The major financial hit is the first since the Japanese automaker was listed on the stock market in 1957. A failed bet on electric vehicles left the company with $9 billion in restructuring costs.
The massive financial losses are directly tied to low consumer demand for electric vehicles. President Donald Trump's successful Made in America policies are also shifting the current market. "EV demand has declined considerably, due to the rollback of environmental regulations in the U.S. and other factors," Honda said in a statement.
CEO Toshihiro Mibe confirmed on Thursday that the company suffered a staggering $2.7 billion loss. The automaker is now abandoning its target to make electric vehicle sales 20 percent of profits by 2030. The company previously set an ambitious goal to fully transition to electric or fuel-cell vehicles by 2024.
Losses related to electric vehicle operations are expected to reach an estimated $16 billion. The Trump administration has officially moved away from progressive electric vehicle incentive programs. This shift includes blocking California’s stringent vehicle mandates and removing former President Joe Biden's costly EV tax credit.
Honda managed to stem some of the financial bleeding through an increase in global motorcycle sales. The company sold 20 million more motorcycles than last year. This translated to a half a percent increase, bringing in $138 billion for the fiscal year through March.
The company sold 3.4 million cars around the world during the same fiscal year. This represents a significant drop from the 3.7 million vehicles sold during the previous year. Despite the historic loss, Honda is still forecasting a $1.7 billion profit for the fiscal year through March 2027.
"We will continue our research to develop future technologies including electric vehicle batteries," Mibe said. "We will get back on a growth track." The executive added that the company will acknowledge the need to work on hybrids and regular gasoline-engine models while pursuing carbon neutrality.