Coin Press - Electric vehicle rethink to cost Honda almost $16 billion

"Honda believed EVs would be the optimal solution from a long-term perspective. Based on this belief, Honda shifted its strategic direction toward the popularisation of EVs," the firm said.

But it added that the profitability of its auto business was declining because of "the United States government policy shift including the imposition of import tariffs".

It also pointed to the abolition of US tax incentives for EV purchases and the easing of fossil fuel regulations, as well as a decline in the competitiveness of its products in Asia.

It said that in response to the slowdown of the EV market in North America, it had decided to cancel the launch and development of certain electric models there.

Resulting expenses and losses related to the reassessment of its EV strategy, including expected losses for the current fiscal year, would be up to 2.5 trillion yen ($15.7 billion), Honda said.

These come from impairment and write-off losses on assets that were intended to be used for the production of these vehicles, the firm added.

It also said it could write down investments in China prompted by intensified competition there.

It forecast a net loss of between 420 billion and 690 billion yen for the year to end-March, compared with an earlier profit projection of 300 billion yen.

O.Ignatyev--CPN