Honda posts first annual loss in 70 YEARS as Japanese car giant blames poor EV sales

Updated: 06:55 EDT, 15 May 2026 Car manufacturer Honda has posted its first annual loss in 70 years - and it has blamed its investments in electric vehicles.The Japanese motor giant said demand for EVs has not been as strong as the company had forecast, as it revealed total operating losses for the year ending March 2026 of ¥423billion (£1.99billion).The car maker recently culled the only EV from its UK showrooms, the e:NY1 SUV, due to underwhelming sales. This has left it without an electric car in its dealerships.However, it will shortly stock examples of its new Super-N - an electric city car inspired by Japan's popular and cheap kei cars. It will cost less than £20,000.During its financial results announcement in Tokyo on Thursday, the automaker said it will scrap some of its EV production targets and begin to source parts from China in a bid to reduce costs.It also unveiled plans to launch a range of new hybrid models to appease drivers who are not convinced to go electric. Car manufacturer Honda has posted its first annual loss in 70 years as CEO, Toshihiro Mibe (pictured), blamed its investments in electric vehiclesHonda bosses cited significant changes in US policy for its losses.Tax incentives were taken away for US drivers purchasing new EVs last year; they previously received up to $7,500 (£5,500) in tax credits, but this was axed in September 2025.Donald Trump also imposed new tariffs on vehicles arriving from overseas in an effort to protect American car makers, which has been a hammer blow to Honda's profitability.Honda said it will now focus on its expansive motorcycle business and financial services, as well as reinvesting in hybrid passenger cars.This includes a new family model due to arrive in 2028, which has been previewed by the Honda Hybrid Sedan Prototype - a large hybrid fastback.Execs said the saloon will use its next-generation hybrid system, previously claimed to be the 'world's most efficient' petrol-electric powertrain.Latest technology will see fuel economy boosted by 10 per cent over the current hybrid drivetrain and will slash production costs by 30 per cent.The hope is that a pivot back to hybrids will recover the losses from its failed EV strategy.The financial results come just months after Honda wielded the axe on its 0 Series saloon and 0 Series SUV electric models, which it was building in collaboration with Sony. Sony's Afeela brand has also been dropped as a result.In March, CEO Toshiro Mibe said Honda's scaling back of investment in electric cars 'should not be interpreted as abandoning EVs' and that it was a 'very difficult decision', having pumped billions into its battery-powered future.'Our focus will be on next-generation [hybrids],' he added.'For mid-sized hybrid electric vehicles, we expect meaningful cost reductions, and we believe these models will remain highly competitive.'Yet on Thursday, he said Honda has ditched its schedule for EVs to make up a fifth of new car sales by 2030 and its long-term target for all of its vehicles to be battery-powered by 2040.Honda expects ¥512billion (£2.4billion) in EV-related losses in the next financial year ending March 2027. Honda says it will perform a U-turn on its EV strategy and go back to developing hybrid cars. It promised a new saloon family model (pictured) by 2028 The Japanese brand also revealed its Acura Hybrid SUV Prototype at the financial results announcement in Tokyo. This would be a US market model Mibe said Honda's scaling back of investment in EVs 'should not be interpreted as abandoning EVs' and that it was a 'very difficult decision', having pumped billions into its strategyIn the wake of Honda's announcement this week, analysts say the company's scale and legacy have made it difficult for the brand to react quickly to peaks and troughs in EV demand.'It's a bleak milestone for Honda but not a surprising one,' AJ Bell financial analyst Danni Hewson told the BBC.'Like many legacy automakers, it gambled on motorists making a quick move to EVs - and lost as the world shifted.'Hewson added that even though demand for EVs has risen in the wake of rocketing petrol prices triggered by the US-Israel war with Iran, companies like Honda are 'having to adapt on the fly, which is tough for businesses of this scale'. CARS & MOTORING: ON TEST