Honda Motor Company, Ltd. ( HMC ) shares are trading lower Thursday after the company cut its fiscal-year 2026 outlook following a reassessment of its electric vehicle strategy.

Honda ( HMC ) shares are sliding. Why is HMC stock dropping?

EV Strategy Reassessment Leads To Expected Losses

Honda ( HMC ) said it decided to cancel the market launch and development of certain electric vehicle models previously planned for production in North America as part of a broader review of its automobile electrification strategy. The company cited changing business conditions, including U.S. policy shifts such as the abolition of tax incentives for EV purchases and easing of fossil fuel regulations, which have slowed EV adoption.

The company now expects to record significant losses tied to the strategy review. Honda ( HMC ) anticipates operating costs and expenses of 820 billion yen to 1.12 trillion yen, along with 110 billion yen to 150 billion yen in losses related to equity-method investments.

In addition, Honda ( HMC ) expects to record losses of 340 billion yen to 570 billion yen in its non-consolidated financial statements due to impairment and write-off losses on assets tied to the canceled EV programs and other related costs.

Honda ( HMC ) also revised its consolidated financial outlook for the fiscal year ending March 31. The company now expects operating profit to range from a loss of 570 billion yen to a loss of 270 billion yen, compared with its prior forecast of 550 billion yen in operating profit.

Profit attributable to owners of the parent is now expected to range from a loss of 690 billion yen to a loss of 420 billion yen, versus the earlier forecast of 300 billion yen in profit.

Revenue guidance remained unchanged at 21.1 trillion yen for the fiscal year.

Honda Shares Edge Lower

HMC Price Action: At the time of writing, Honda ( HMC ) shares are trading 6.43% lower at $25.77, according to data from Benzinga Pro.

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