Honda Motor Co. cut its annual profit guidance by 21% on Friday, citing a critical semiconductor shortage and plummeting Asian demand while confirming the Japanese automaker now expects electric vehicles to comprise just 20% of global sales by 2030, reports 彭博社. The announcement marks the latest setback in Honda’s year of cascading retreats from electrification ambitions.

The automaker now forecasts ¥550 billion ($3.6 billion) in operating profit for the fiscal year ending March 2026, down sharply from its previous ¥700 billion target and missing analyst expectations of ¥869 billion. Honda also slashed its global vehicle sales forecast from 3.62 million to 3.34 million units, representing a 280,000-unit reduction driven by semiconductor shortages and weakening demand across Asia.

Semiconductor Crisis Hits Production Hard

The profit warning comes as Honda grapples with an industrywide chip shortage stemming from a geopolitical dispute over Nexperia, a Netherlands-based semiconductor supplier owned by Chinese company Wingtech Technology. When the Dutch government seized control of Nexperia in September 2025 over security concerns, China responded by blocking exports of the chipmaker’s automotive semiconductors.

The supply disruption forced Honda to implement production cuts across North American facilities, including plants in Marysville, Ohio and Celaya, Mexico. The automaker estimates the semiconductor shortage will reduce operating profit by ¥150 billion ($1 billion) this fiscal year. Several facilities suspended operations in late October before a temporary deal between the U.S. and China provided partial relief in early November.

“We are currently managing an industrywide semiconductor supply chain issue, making strategic adjustments to production as necessary,” Honda said in a statement, calling the situation “fluid.”

The Nexperia chips control basic vehicle functions including windshield wipers, window controls, and antilock braking systems—legacy semiconductors that lack sufficient alternative suppliers, according to S&P Global Mobility.

Asian Market Collapse Accelerates EV Retreat

Beyond the chip crisis, Honda faces mounting pressure in Asian markets where Chinese automakers are aggressively undercutting prices. The company cut its Asian sales forecast from 1.09 million to 925,000 vehicles for the current fiscal year, with particularly sharp declines in China and Southeast Asia.

“Competition in Southeast Asia has intensified due to the entry of Chinese automakers, which prompted firms in the region to offer consumers higher incentives or lower prices,” Executive Vice President Noriya Kaihara said Friday. “We recognize that a fundamental review is necessary for Asia. However, from this fiscal year through the next, there’ll be no particularly new models.”

The admission that Honda has no new Asian models planned through fiscal 2027 underscores how completely the automaker has abandoned competition with Chinese EV giants like BYD and Chery, which slashed development times to as little as 18 months while Honda takes over five years.

EV Target Officially Drops To 20%

Honda confirmed Friday that its global EV sales ratio will reach only 20% by 2030, down from a previously announced target of 30%. The revised figure represents between 700,000 and 750,000 electric vehicles annually, assuming Honda maintains current sales volumes.

The 20% target had been implied in May 2025 when CEO Toshihiro Mibe stated EV sales would fall “below the previously announced target of 30%,” but Friday’s announcement marks the first explicit confirmation of the reduced figure. Honda simultaneously announced it would prioritize hybrid electric vehicles, planning to launch 13 new hybrid models between 2027 and 2031 with a target of 2.2 million hybrid sales by 2030.

For Honda’s first half of fiscal 2025, the automobile business posted an operating loss due largely to ¥224 billion ($1.5 billion) in one-time expenses related to electric vehicles. The company’s motorcycle business, by contrast, remains profitable with record sales volume and operating profit in the first half.

Tariff Impact Lower Than Expected

On a marginally positive note, Honda revised its expected impact from Trump administration tariffs downward to ¥385 billion ($2.5 billion) from a previous estimate of ¥450 billion ($2.95 billion). The 25% tariffs on vehicles and parts imported from Canada, Mexico, and Japan took effect in April 2025.

Honda’s localized North American production provides some insulation, with 60% of vehicles sold in the U.S. market built domestically. The company produced only 5,379 vehicles imported from Japan to the U.S. in 2024. However, the tariffs still force costly production shifts, including moving CR-V crossover production from Ontario to facilities in Ohio and Indiana.

EVXL’s Take

Honda’s November profit warning isn’t just another quarterly miss—it’s the culmination of a year-long unraveling of the company’s electrification strategy that reveals how unprepared legacy Japanese automakers were for the EV transition. The semiconductor shortage provides convenient cover, but the real story is Honda’s wholesale abandonment of EV competition in favor of hybrids that will pollute roads for decades.

Back in July, we covered Honda scrapping its large electric SUV planned for 2027, when the company cut EV investment by $21 billion. Then in May, Honda delayed its $11 billion Canadian EV hub by at least two years while initially announcing EV targets would fall “below 30%.” The company also ended Acura ZDX production after just one model year in September, requiring $30,000 off MSRP to move inventory.

Now we have explicit confirmation: Honda expects just 20% EV sales by 2030, a target already laughably behind the market. Global EV sales are projected to hit 25% in 2025—meaning Honda is targeting less than current market share five years from now. Meanwhile, Chinese competitors BYD and Chery are growing sales by 40% annually while slashing development times to 18 months and undercutting Honda’s prices across Asia.

The pattern is unmistakable when you connect the dots with our previous coverage. Nissan posted a $4.5 billion loss and shuttered its Wuhan EV plant. Toyota reached out to partner with struggling Nissan after Honda merger talks collapsed. The entire Japanese automotive establishment is retreating in the face of Chinese competition, and Honda’s semiconductor excuse doesn’t change that fundamental reality.

What makes this particularly galling is Honda’s simultaneous claim that “EVs are the optimal solution to achieve carbon neutrality” while systematically dismantling every EV program. The company now plans to flood markets with 13 new hybrid models that will continue burning fossil fuels through 2050 and beyond. That’s not a transition strategy—that’s climate theater designed to maintain short-term profits while ceding the future to competitors who actually committed to electrification.

The semiconductor shortage will resolve. The deeper problem—that Honda fundamentally miscalculated the pace of EV adoption and is now five years behind Chinese competitors in technology, pricing, and production speed—won’t fix itself with press releases about flexible manufacturing and hybrid investments.

What do you think? Share your thoughts in the comments below.