Honda has just realized its push for more electric vehicles (EVs) could result in financial troubles in the coming years. Combined with a slower-than-expected EV demand in North America, the impact of US tariffs, and record losses in its consolidated financial results for the fiscal year ending in March 2026, Honda has decided to pull the plug.

After recording a 42% plunge in group net profit after a series of unfortunate events & unexpected shifts last month, Honda has made the decision to cancel the development and market launch of three upcoming EVs. These are the Honda 0 SUV, the Honda 0 Saloon, and the Acura RSX EV, which was revealed last year as a prototype.

According to Honda, the decision was made as part of the automaker’s reassessment of its electrification strategy due to various changes in the business environment. Initially, Honda undertook a massive strategic shift toward the popularization of EVs in North America and has been making steady progress, as well as in hybrid vehicles. 

However, the profitability of Honda’s automobile business is on the downturn due to several factors. These include the unfavorable impact of changes in US tariff policies on the gasoline and hybrid vehicle business, the decline in competitiveness of Honda products in Asia due to the impact of the allocation of more resources to EV development, and the easing of fossil fuel regulations & revisions to EV incentives in the US.

After careful consideration, Honda declared that the best way to mitigate losses was to reassess its automobile electrification strategy, resulting in the axing of its aforementioned EVs. As a result, Honda now expects to write off and incur impairment losses on tangible and intangible assets for the three canceled EVs, as well as losses to additional expenses from the cancellation of the said vehicles. In addition, competition in China has also intensified, which prompted Honda to reassess the recoverability of investments accounted for using the equity method in China.

For its future direction, Honda will reorganize its resource allocations to further strengthen its hybrid models. In Asia alone, Honda will strive to enhance its competitiveness by introducing next-generation hybrid models and reassessing its resource allocation. As far as introducing new EVs is concerned, Honda says it will implement a flexible long-term perspective while monitoring the balance between profitability and market trends.

There’s no word yet if the Honda 0 Alpha or the Honda Super-ONE prototype will be facing the ax. However, these models are not intended for North America, so there’s a possibility that the 0 Alpha and Super ONE electric hatchback could still be offered in global markets.

With Honda set to incur losses, we’ll be curious to see how the automaker will navigate this financial disturbance due to its reassessment of its electrification strategy. Moreover, we’re curious to see if Honda’s EV plans will be redirected elsewhere outside the US market.