The $72 Billion EV Retreat: How Global Automakers Are Cutting Their Losses

Five major automakers have collectively written down $72.2 billion in electric vehicle investments, with Honda announcing the latest and largest single hit of $15.7 billion on Thursday, as U.S. demand for battery-powered cars continues to fall sharply following the Trump administration's rollback of federal subsidies.

Honda, Japan's second-largest automaker, said it would cancel three battery-powered models planned for the U.S. market — the Honda 0 Series Saloon, the Honda 0 SUV and the Acura RSX — and would report its first annual net loss in nearly 70 years as a publicly listed company. The writedown, estimated at 2.5 trillion yen, covers EV investments in the U.S. and a partial write-off of its Chinese operations.

"We were shocked by the sheer scale," said Seiji Sugiura, a senior analyst at Tokai Tokyo Intelligence Laboratory, in a note to clients. "This decision was taken at an extremely delicate stage, just before mass production, after substantial budgets had already been committed — suggesting that it was a very tough call." The company expects cash outflows of up to 1.7 trillion yen ($10.66 billion) from the restructuring, largely due to supplier compensation costs.

Christopher Richter, an autos analyst at CLSA, said Honda had moved too slowly once the policy environment shifted. "They took too long to contemplate this. They were cancelling these projects virtually on the eve of releasing them," he said.

Honda's writedown brings the total across five automakers to $72.2 billion. Ford has recorded $19.5 billion in EV-related losses. Stellantis took a $26.5 billion charge. General Motors wrote down $6 billion. Porsche announced a $4.5 billion writedown earlier this week, according to Euronews.

US Demand Collapses After Subsidy Rollback

The immediate cause of the industry-wide reversal is a sharp contraction in the U.S. EV market. The Trump administration cancelled the $7,500 federal tax credit available to American EV buyers and lessees, and relaxed federal fuel economy standards, reducing the regulatory pressure on automakers to electrify their fleets.

U.S. EV registrations fell 48 percent year-on-year in December to 75,427 vehicles, with market share dropping from 9.9 percent to 5.3 percent of the light-vehicle market, according to Automotive News. In January, registrations fell a further 41 percent year-on-year to 59,802 vehicles out of nearly 1.2 million total vehicles, with market share at 5.1 percent, down from 8.3 percent the previous year.

Battery-powered vehicles accounted for just 2.5 percent of Honda's 3.4 million global sales last year, or about 84,000 vehicles.

Automakers Pivot to Hybrids

Honda said it would focus on hybrid development in the U.S. The company also said it plans to strengthen its lineup and cost competitiveness in India, which it identified as a market for potential expansion.

Stellantis is selling a 49 percent stake in its joint battery venture to LG Energy Solution and has converted the all-electric Ram 1500 REV into a plug-in hybrid with a range extender. The company is also returning the Hemi V8 petrol engine to a wider portion of its lineup.

Porsche has decided to develop petrol-powered variants of the 718 Boxster and Cayman alongside the electric versions and has extended the production run of the petrol-powered Macan.

Ford has projected that hybrids, extended-range EVs and pure battery-electric vehicles will together account for 50 percent of its global mix by 2030.

GM will also reduce battery cell production capacity, cut shifts and lay off hundreds of workers at its Factory Zero EV facility. CEO Mary Barra told Automotive News earlier this year that GM was "evaluating" plug-in hybrids, though no product announcements have followed.

China Poses a Longer-Term Challenge for Honda

Beyond the U.S., analysts say Honda faces a more structural problem in China, the world's largest auto market.

Honda sold just 17,000 electric vehicles in China last year — 2.5 percent of its approximately 677,000 total sales there, and about one-fifth of its global EV volume. The company said in a statement that it had been unable to deliver products that offer better value than those from China's newer domestic EV manufacturers, citing their shorter development cycles and capabilities in software-driven vehicles, including advanced driver-assistance systems.

"The move raises my concern about Honda's technological competitiveness in the long run," said Vincent Sun, a senior analyst at Morningstar.

Analysts also flagged Honda's EV joint venture with Sony Group, Sony Honda Mobility, as a source of additional uncertainty. The venture's Afeela 1 sedan entered production in January, but Honda said Thursday that the partnership's future direction was still under discussion.

Reporting by Reuters contributed to this story.