Honda Motor reported a 42 percent drop in net profit for the nine months ending in December 2025, as the Japanese automaker contends with U.S. tariffs, electric vehicle write-downs, and supply chain disruptions.
The company said net profit fell to 465.44 billion yen, or approximately $2.99 billion, compared to the same period the previous year. Despite the sharp decline, Honda maintained its full-year profit forecast, signaling that executives believe the company can stabilize performance in the months ahead.
A significant factor behind the downturn was 267.1 billion yen in one-time provisions and impairments. These charges were tied to electric vehicles sold in the United States and to development assets written down as Honda reevaluated its EV strategy. The adjustments reflect a broader shift in the company’s long-term planning as global demand for electric vehicles has not grown as quickly as once projected.
Earlier this year, Honda announced plans to cut roughly $20 billion in planned EV investment over the coming years. The company now expects electric vehicles to account for less than 30 percent of its total sales by 2030, a target it had previously set. Honda CEO Toshihiro Mibe indicated that EVs may represent closer to 20 percent of total vehicle sales by the end of the decade. In response, Honda is refocusing more heavily on hybrid models as a transitional solution.
In addition to EV-related challenges, Honda’s North American production was disrupted by a shortage of semiconductor chips from Dutch supplier Nexperia. The supply issue emerged amid diplomatic tensions between the Netherlands and China over control of the chipmaker, highlighting how geopolitical disputes can directly affect automotive manufacturing.
U.S. tariffs also contributed to the pressure on earnings, adding to the cost burden facing the company. Together, these factors created a difficult operating environment during much of 2025.
While Honda’s leadership remains confident in meeting its annual forecast, the steep profit decline underscores the financial strain facing global automakers as they navigate electrification, shifting consumer demand, and ongoing supply chain volatility.
