Historic crash in the auto industry: A global giant goes bankrupt after 70 years of profits
Changing US emissions regulations and declining sales of electric cars have upset the plans of major automakers. One of the biggest companies in the industry has become the latest victim.
Japanese automaker Honda announced its first annual loss since 1955 after posting a nearly $10 billion (¥1.6 trillion) drop in profit for the financial year ended in March, according to CNN.
The decline wiped out an estimated $7.4 billion in potential profit. Instead, the company reported a final net loss of $2.6 billion (¥403.3 billion).
Honda also expects further impairment on its previous investment in electric vehicles in the current fiscal year, although this will not be enough to cause another loss.
The results follow those of General Motors, which reported spending $7.2 billion in 2025 to exit electric vehicle efforts. At the same time, rival Ford announced spending of $17.4 billion for this year.
Stellantis, which makes cars in North America under the Jeep, Ram, Dodge and Chrysler brands, also reported spending of $29.7 billion (25.4 billion euros).
General Motors still managed to report a profit for the year, even with this expense. But the cost of exiting the EV sector has also led Ford and Stellantis to report net losses for 2025. Ford also expects additional spending this year.
Automakers scaled back their electric vehicle ambitions after the Trump administration rolled back tighter emissions rules put in place by the Biden administration. It also eliminated the massive financial penalties companies faced for violating the rules, as well as the $7,500 tax credit for American buyers.
Blockage of the electricity market
Electric vehicle sales fell sharply after the tax credit was scrapped in September. At the same time, the recent jump in gasoline prices has not led to a significant increase in demand for electric cars from American buyers.
Companies had invested billions of dollars to switch to an all-electric range over the next decade, betting on much stricter rules.
Political changes, however, led manufacturers to refocus on selling large gasoline-powered trucks and SUVs, from which they made the most profits. This reversal has been costly, forcing companies to write down the value of their investments on a large scale.
However, plans for electric vehicles have not been completely abandoned. Even tougher emissions regulations are coming in Europe and Asia. The situation could be repeated in several American states. This is the case of California, which wants to ban the sale of new gasoline cars by 2035, although Congress intervened to block the measure.
Automakers are also concerned about increasing competition from Chinese companies, which mainly sell electric vehicles. However, Chinese companies have had a relatively small presence in the US market to date.
