Honda (HMC) Stock;Slides Slightly as $1.7B EV Charges Hit Profits

TLDRs;

• Honda posts $1.7B EV costs amid slowing global demand and trade risks.
• U.S. tariffs weigh on profits as EV strategy undergoes reassessment.
• Motorcycle sales hit record, offsetting car business losses and stabilizing earnings.
• Honda trims 2030 EV target, shifts focus to hybrids and gradual rollout.

Honda Motor Co. reported one-time electric vehicle (EV) expenses of ¥267.1 billion (approximately US$1.7 billion) for the nine months ending December 31, 2025. On top of this, the automaker faced an additional ¥279.5 billion (US$1.79 billion) in costs due to U.S. import duties. These combined pressures caused Honda’s stock to slide slightly as investors digested the impact on profitability.

The automaker cited multiple factors behind the increased costs, including slower-than-expected EV adoption, trade protectionism, supply chain constraints, and rising competition from global players. “The anticipated pace of electrification has not materialized,” said an executive vice president, signaling a reassessment of the timing for new EV rollouts in North America.

Tariffs and Global Challenges Pressure EV Plans

Honda’s shift in near-term priorities includes reducing planned electrification spending from ¥10 trillion to ¥7 trillion through fiscal 2031. This strategic adjustment also leads to a lowered global EV sales target for 2030, from 30% to around 20% of total sales.

Hybrids are expected to play a larger role, with a target of 2.2 million units by 2030, reflecting a more gradual transition toward full electrification.

Honda Motor Co., Ltd., HMC

In the United States, tariffs have posed additional challenges. Honda is moving some CR-V production from Canada to the U.S. to reduce tariff exposure while maintaining Canadian manufacturing volumes and employment. The company continues to monitor trade policies closely as it navigates the global EV landscape.

Motorcycles Bolster Earnings Amid Car Sector Pressures

Despite setbacks in its car division, Honda’s motorcycle business has been a strong profit engine. The company reported record sales of 16.4 million motorcycles in the nine-month period, supporting an operating profit of ¥546.5 billion (US$3.5 billion). These gains helped cushion the financial impact of EV-related costs and tariffs on the automotive side.

Honda estimates that it currently holds about 40% of the global motorcycle market, with ambitions to reach 50% by 2030. The profitability of two-wheelers provides cash flow that allows Honda to continue ramping up hybrid production while the EV market adjusts to slower demand.

Strategy Shift: Hybrids Lead, EVs Follow

Honda’s revised electrification plan reflects both caution and flexibility. While long-term EV goals remain intact, the company is extending the timeline for rollout and emphasizing hybrids as a bridge technology. Analysts note that this approach may help Honda manage higher EV costs while retaining competitiveness amid a cooling EV market.

Investors are closely watching how Honda balances EV development with hybrid expansion and the ongoing contribution of motorcycles. The company’s approach illustrates the broader challenges facing automakers globally: managing trade impacts, slowing adoption curves, and intense competition, all while maintaining profitability in a rapidly evolving automotive market.

Bottom Line:

Honda’s stock experienced a modest dip as $1.7 billion in EV-related costs and U.S. tariffs weighed on earnings. Record motorcycle sales and a shift toward hybrids provide a buffer as the automaker recalibrates its EV strategy for North America and the global market. Investors are now tracking Honda’s progress in balancing electrification ambitions with practical near-term profitability.

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