[DigitalToday reporter Jinju Hong (홍진주)] Honda has shifted toward a hybrid-focused strategy after posting losses of more than $9 billion from scaling back its EV business.

EV outlet Electrek reported on May 14 that Honda booked EV-related losses of 1.45 trillion yen, about $9.2 billion, for the fiscal year ending March 2026, marking the biggest loss in the company’s history.

Honda cancelled plans in March for three new EV models in the United States. In its latest business update, it unveiled 2 new hybrid models to be launched by 2028. The targets are a Honda hybrid sedan prototype and an Acura hybrid SUV prototype. The two models are set to go on sale within the next 2 years.

Honda also laid out the background to the strategy revision. It acknowledged that it had become less competitive because it could not offer better value for money than new EV makers. As a result, it dropped its previous goal of gradually eliminating gasoline vehicles by 2040. Instead, it set carbon neutrality in 2050 as a new goal and shifted to a mixed strategy combining EVs, hybrids, carbon-neutral fuels and carbon-offset technologies.

Production plans are also changing. Honda plans to roll out new hybrids sequentially from next year using a next-generation hybrid system and a dedicated platform. The company said the new hybrid system would raise fuel efficiency by more than 10 percent and cut costs by more than 30 percent compared with the current hybrid system. It plans to launch 15 hybrid models globally by before 2030 and expand large hybrids in North America, a key market, in the D-segment and above.

Honda’s North American production base is also shifting its focus from EVs to hybrids and internal combustion engine vehicles. After scrapping plans to produce the all-electric 0 Series SUV and sedan and the Acura RSX at its Ohio EV hub, Honda decided to reallocate that space to produce hybrids and gasoline vehicles. At its battery joint venture plant with LG Energy Solution, it plans to convert some EV battery production lines to produce hybrid batteries.

Large-scale EV investment has also been put on hold. Honda CEO Toshihiro Mibe confirmed it was indefinitely suspending a $15 billion EV plant plan in Ontario, Canada. Honda previously warned that the cost of restructuring its EV business in the United States could reach up to 2.5 trillion yen, about $15.7 billion.

The earnings burden is expected to continue for the time being. Honda said it posted an operating loss of 414.3 billion yen, about $2.6 billion, for the fiscal year ending March 2026. It estimated total costs from its retreat from an EV strategy at 2.5 trillion yen, with most set to be reflected in the next fiscal year. Honda expects most EV-related losses to be resolved by the fiscal year ending March 31, 2029.

Honda’s mid- to long-term roadmap has effectively been redrawn as well. The company is slowing its shift to EVs, filling any sales gap with more profitable hybrids, and adjusting North American production and its battery procurement structure accordingly. How quickly Honda can settle the costs of scaling back EV investment and restore profitability by expanding hybrids will be a key point to watch.