Another iconic auto brand is taken down by low EV sales

Automakers around the world are learning just how much government subsidies propped up their electric vehicle sales, as the expiration of those subsidies is throwing cold water on the industry’s EV ambitions.

Take Honda, for example.

Over the last three decades, the Japanese automaker has gone from an afterthought in the U.S. market to the fourth-best-selling brand in the country behind GM, Toyota, and Ford, Good Car Bad Car noted.

But on Wednesday, the marque revealed its first annual loss in nearly 70 years, after its big bet on EVs fizzled, costing it 1.45 trillion yen ($9.2 billion) to restructure plans and scrap its long-term sales target for electrified vehicles.

Honda isn’t the only car company, foreign or domestic, rightsizing its EV production these days. Companies from Volkswagen to General Motors have been forced to make tough choices about their EV plans in the present, while they continue to build capacity for the future.

Honda stock jumps, despite company reporting first-ever annual loss

Shares of Honda Motor Co popped 4.5% in early market trading on Thursday, May 14, after the company said it would keep its dividend the same, despite the dismal fiscal year.

The company reported a total operating loss of 414.3 billion yen ($2.63 billion) for the fiscal year ended March, well ahead of analysts’ estimates of a 315.6 billion yen loss. The company reported a profit of 1.2 trillion yen a year ago.

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Honda still expects to pay a dividend of 70 yen per share to shareholders in fiscal 2027. The company also expects to return to profit in fiscal 2027. Those two bits of good news were seemingly enough to overcome Honda’s historic profit decline.

Honda shared its three-year and five-year plans with shareholders.

“Over the next three years, Honda will focus on rebuilding our automobile business structure,” the company said in a May 14 briefing. “Then, in the following two years, based on the rebuilt business structure, Honda will introduce new products flexibly and in an agile manner and put its automobile business on a trajectory of further growth.”

Honda CEO Toshihiro Mibe, center, will oversee a plan to build new products within the next five years.

Photo by Bloomberg on Getty Images

Downturn in EV sales hurts the auto industry

While U.S. EV sales reached record highs in 2025 during the first half of the year, much of that growth was driven by the expiration of the $7,500 EV tax credit in September.

By the end of the year, sales had dipped 4% to 1.8 million units, despite global EV sales rising 20% year over year to 20.7 million units, according to Benchmark Mineral Intelligence.

But even during the good months, there were concerning signs for U.S. EV sales.

Consider the third quarter, when consumers purchased 90 different EV models, but only nine sold more than 10,000 units.

October sales by EV brandTesla: 40,650Chevy: 5,910Ford: 4,912Cadillac: 4,344Hyundai: 2,429
Source: Cox Automotive

“The vast majority of EVs sell at a rate of far less than 2,000 units a month, or 6,000 units a quarter. In the volume-driven business of automotive manufacturing, low volume is the enemy; EV profitability remains a distant dream for nearly every automaker,” Cox Automotive said at the time.

Once the incentives dried up, the industry’s record-setting pace soon became a distant memory, leading companies to write down EV losses. Ford wrote down $19.5 billion, while GM said it recognized up to $8.7 billion in EV-related charges and write-downs in 2025.

“October marked a sharp reversal for the electric vehicle (EV) market as the expiration of the federal EV tax credit cooled demand after three months of accelerated sales,” said Stephanie Valdez Streaty, director of industry insights for Cox Automotive.

“Buyers rushed to secure incentives before the deadline, but once it passed, momentum slowed. Inventories climbed quickly, and pricing shifted upward for both new and used EVs, reflecting a market in transition.”

Related: Ford CEO Jim Farley takes unexpected turn on EVs

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