Honda has officially scrapped its goal of selling only electric and fuel-cell vehicles by 2040 as the Japanese automaker reported massive financial losses.
Honda now says market conditions and consumer demand have shifted significantly enough that a fully electric lineup within the next 14 years is no longer achievable. Honda now joins a long list of automakers pivoting away from EVs and doubling down on hybrids.
“Because of the uncertainty in the business environment and also the customer demand, is changing beyond our expectation and, therefore, we have judged that it’ll be difficult to achieve. That ratio is not realistic as of now. We have withdrawn this target,” said Honda CEO Toshihiro Mibe on Thursday.
The announcement came alongside disastrous financial results for the Japanese automaker. Honda posted its first annual operating loss in roughly 70 years, driven largely by massive EV-related investments that failed to deliver the returns the company expected. For the fiscal year ending March 2026, Honda reported EV-related losses of more than ¥1.5 trillion (C$13 billion/US$10 billion), contributing to an operating loss exceeding ¥400 billion (C$3.4 billion/US$2.6 billion).
Following the retreat on their EV plans, Honda revealed a new strategy focused on hybrid vehicles. The automaker plans to introduce 15 next-generation hybrid models globally by March 2030, with North America expected to become a key market for the new lineup.
Honda previewed two upcoming hybrid vehicles during the presentation, including a new sedan under the Honda brand and an Acura SUV. The company is investing roughly ¥4.4 trillion (C$38 billion/US$28 billion) into advanced hybrid systems powered by new four-cylinder and V6 gasoline engines.
According to Honda, the larger hybrid models will deliver approximately 30% better fuel efficiency and 10% stronger acceleration compared to similarly sized combustion vehicles today. The first of those models is expected to arrive by late 2028 or early 2029.
The shift also appears to impact Honda’s North American EV ambitions. The company confirmed it is suspending plans to build out a $15 billion EV battery plant in Canada.
Honda’s decision mirrors a growing trend across the automotive industry. While EV adoption continues to rise globally, the pace has fallen short of expectations set earlier this decade. Automakers are now increasingly leaning on hybrids as a bridge between traditional gas-powered vehicles and a fully electric future.
Even with the strategic change, Honda says it still plans to achieve overall carbon neutrality by 2050, though that roadmap will now include a mix of EVs, hybrids, and other emissions reduction measures rather than an exclusively electric lineup.
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