Honda reported that profit for the nine months ending in December declined 42% year-over-year, citing the combined impact of U.S. tariffs and softer electric vehicle demand.
The company posted net income of 465.4 billion yen (approximately $3 billion) over the three-quarter period, down from 805.2 billion yen (around $5.2 billion) a year earlier.
Revenue also contracted, falling 2.2% to 15.98 trillion yen ($102.6 billion). Despite the deterioration in earnings, Honda left its full fiscal-year profit forecast unchanged at 300 billion yen ($1.9 billion), according to AP News.
This marks the second straight year in which profit has declined during the April–December timeframe, although last year’s drop was comparatively modest at 7.4%.
The downturn has pushed Honda’s core carmaking division into negative territory. The unit recorded an operating loss of 166.4 billion yen ($1.07 billion) for the nine-month span, compared with an operating profit of 402.6 billion yen (about $2.6 billion) in the same period the previous year.
Honda attributed the automotive division’s operating deficit largely to one-time expenses tied to its electric vehicle strategy, including asset impairments and other write-downs, in addition to the financial burden created by U.S. import tariffs.
The deceleration of EV sales in the United States was identified as a primary drag on performance.
In response, Honda revised its long-term EV outlook, now projecting that battery-electric vehicles will represent 20% of global sales by 2030, reduced from a prior target of 30%. The company has also discontinued development of certain planned EV models.
Although Honda is not a dominant force in the EV segment, currently offering only two battery-electric vehicles in the U.S., the Honda Prologue and the Acura ZDX, it still incurred roughly $1.7 billion in one-time EV-related provisions and impairments during the nine months ending in December.
Another significant headwind was the imposition of U.S. tariffs on Japanese-made automobiles and components.
The White House introduced a 25% tariff last year, later reduced to 15% after Japan pledged $550 billion in U.S. investment.
Given Japan’s export-heavy economy, and the United States being its largest auto export market, these trade measures have had material consequences.
Beyond tariffs, regulatory shifts also affected Honda’s outlook. The administration rolled back programs designed to accelerate EV adoption, including the termination of the federal EV tax credit after the third quarter of 2025 and the relaxation of stringent fuel-economy standards that had incentivized electrification.
Honda’s experience mirrors that of several other global automakers that expanded aggressively into EV production only to confront slower-than-anticipated demand.
Companies including Stellantis, Ford Motor Company, General Motors, and Volkswagen Group have all recorded substantial write-downs linked to their electric vehicle programs over the past year.
In aggregate, Honda’s latest results underscore the financial strain created by recalibrating EV ambitions amid shifting demand patterns and evolving trade policy.
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