Asger Risom
Honda’s electric vehicle sales have collapsed, forcing a strategy rethink — but its production partner General Motors could still come out ahead.
Honda’s electric vehicle push has hit a wall — and its partnership with General Motors may end up benefiting Detroit more than Tokyo.
Sales cut in half
Honda’s global EV sales plunged in the October–December quarter, falling to just 15,000 units — roughly half the volume of the prior period. The downturn underscores how fragile the company’s electric transition has become.
The Honda Prologue and Acura ZDX — both developed with General Motors and built on GM’s Ultium platform — were meant to fast-track Honda’s EV ambitions. Instead, they’ve exposed the risks of relying on a partner’s architecture during a volatile market shift.
The partnership problem
Both crossovers are assembled in GM factories: the Acura ZDX at Spring Hill, Tennessee, and the Honda Prologue at Ramos Arizpe, Mexico.
But demand dried up late last year. Prologue sales dropped 86% in the fourth quarter to just 2,641 units. The ZDX has already been discontinued after a single model year, tallying 19,411 sales in total.
With orders reduced, Honda must compensate GM for lower production volumes, according to Automotive News. That means even as Honda pulls back, GM still gets paid.
Mounting losses
Honda’s EV division is expected to lose approximately $4.48 billion for the full fiscal year ending March 2026. In the first nine months alone, EV-related write-offs and expenses hit $1.71 billion.
Operating profit fell 61% in the October–December quarter, marking the fourth consecutive quarter of operating losses. U.S. import duties are projected to add another $1.98 billion in costs by fiscal year-end, further squeezing margins.
Aggressive incentives haven’t helped. Honda reportedly spent more than $17,000 per Prologue sold in January, yet only 664 units moved that month.
GM’s quiet upside
While Honda reassesses its EV strategy, GM may be the unexpected beneficiary.
The Ultium-based Prologue and ZDX helped GM spread development costs across more vehicles and keep factories running. Even with reduced output, compensation clauses soften the financial blow.
In effect, Honda absorbs the sales volatility — while GM retains platform leverage.
Resetting the strategy
Honda is now conducting what it calls a “fundamental review” of its automotive strategy. The company is pivoting to its in-house-developed “0 Series” EV architecture, beginning with the Acura RSX crossover later this year. Two Honda-branded 0 Series models — an SUV and a Saloon — will follow.
The shift also reflects tempered expectations. In 2024, Honda aimed to sell two million EVs annually by 2030. That projection has since been cut to 700,000–750,000 units.
The EV transition hasn’t been abandoned — but it has been dramatically recalibrated.
Sources: InsideEVs; Automotive News; Honda financial disclosures
