Honda is the latest automaker to take a billion-dollar bath on EVs. Ford, General Motors and Stellantis all took billion-dollar write-downs on their EV investments during the past fiscal years. Stellantis reported the worst: a $26 billion write-down that will lead to the automaker’s first annual loss since it began in 2021.

“The business environment and customer demand have changed beyond our expectations,” Toshihiro Mibe, Honda’s chief executive, said in a news conference. “We were not able to respond flexibly enough.”

Just five years ago, Honda was racing to catch up to Tesla and Chinese rivals such as BYD in building electric cars. It pledged to make its entire lineup electric or hydrogen-powered by 2040, a more aggressive transition than rival Japanese automakers like Toyota.

However, demand for EVs has not matched projections, due to lingering concerns about charging infrastructure and high sticker prices. Then, last year, federal subsidies for many electric models were gutted by the Trump administration.

In 2025, electric vehicle sales in the U.S. fell, snapping a record-breaking growth streak half a decade long for electric cars.

Now, Honda is abandoning its 2040 goal of selling only electric and hydrogen-powered cars. Instead, the automaker will focus on gasoline-electric hybrids.