Just five years ago, Honda’s chief executive, Toshihiro Mibe, was widely hailed as a visionary.
He pledged that by 2040, the Japanese automaker — long celebrated for its mastery of internal-combustion engines — would spend tens of billions of dollars to phase them out in favor of electric vehicles.
The bold shift won applause from Wall Street, then bullish on all things E.V., and environmental groups that had criticized rival Japanese automakers for clinging to hybrid and gasoline-powered cars.
More recently, however, Mr. Mibe’s vision has unraveled in a way the chief executive has called “heartbreaking.”
In the United States, Honda’s largest automobile market, the Trump administration’s elimination of federal tax credits for electric vehicles has sapped demand, contributing to the automaker’s first annual net loss in its seven-decade history as a public company. It has since abandoned its goal of going all-electric by 2040.
As the scale of the setback became clear, criticism increasingly turned toward the executive who had championed this strategy.
Inside Honda, some senior executives, including at least one board member, have begun rallying internal support to urge Mr. Mibe to resign and take responsibility for the company’s troubles. This article is based on interviews with six people who work at Honda or have close knowledge of its operations. Most asked not to be identified to discuss internal matters.
A Honda spokesman declined to comment, saying the company was unaware of the details included in this article. The company declined to make Mr. Mibe available for an interview.
Mr. Mibe has a turnaround plan centered on cost-cutting, a renewed emphasis on hybrids and governance changes intended to strengthen accountability. An annual shareholder meeting on Friday, where investors will vote on the appointment of board members, will serve as an important test of confidence in management.
Honda’s troubles reflect a broader reckoning across the automotive industry. In some ways, the company has become a poster child for legacy carmakers, from Volkswagen to Ford Motor, that wagered billions on a rapid shift to an electric future, only to be caught flat-footed when consumer demand cooled.
Honda’s decision to go electric wasn’t wrong, and the industry as a whole has been buffeted by the E.V. slowdown, said Takaki Nakanishi, chief executive of the Nakanishi Research Institute, an automotive consultancy.
“The problem is that Honda had many chances to slow down their E.V. push but their reaction was too slow,” Mr. Nakanishi said. Now that E.V. enthusiasm has faded, “Mr. Mibe became what you could call a king without clothes.”
Honda pledged to abandon gasoline engines as the global shift toward electric vehicles was gathering speed. Valuations of E.V. leaders like Tesla were soaring as governments tightened emissions regulations worldwide. The Biden administration added momentum by offering billions in subsidies and consumer tax credits.
For Honda, the move was a striking pivot. The company is one of the world’s largest engine manufacturers, producing powertrains for Formula 1 racecars and commercial jets. Yet the E.V. push also fits its tradition of technological bravado.
Honda has long prided itself on an engineering culture willing to defy consensus. In the 1970s, it stunned rivals by developing a revolutionary engine that eliminated costly components while meeting strict U.S. clean-air standards. The breakthrough helped establish models like the Civic as global best sellers.
Even so, Mr. Mibe — who spent more than three decades in Honda’s engineering division before becoming chief executive in 2021 — acknowledged from the outset that the all-electric gamble would be an “uphill struggle.”
Calm and analytically minded, speaking behind half-rim glasses and under a neat sweep of hair, the 64-year-old Mr. Mibe framed the decision not as an ideological crusade but as a practical necessity if Honda were to meet Japan’s goal to be carbon neutral by 2050.
A company traditionally wary of sweeping alliances suddenly sought partners. In 2022, Honda teamed up with General Motors to develop affordable electric models. Mr. Mibe also persuaded Sony to form a software-focused E.V. joint venture.
Honda committed tens of billions of dollars to research and development and initiated work on an in-house platform designed to underpin a new battery-powered sport utility vehicle and a sleek, spaceshiplike station wagon, the Saloon.
Then the market shifted. In 2025, U.S. electric vehicle sales fell, snapping a half-decade of record growth. The slowdown hit much of the industry, including Honda. At private product clinics in Japan, where automotive experts evaluate upcoming models, the reception to vehicles, including the Saloon, was chilly.
Internally, faith in leadership was beginning to fray. Critics within the company said Mr. Mibe remained largely cloistered in Japan. He took the reins at Honda when Covid-19 restrictions were impeding travel, but even in the following years, he traveled only a few times to China — the global center of E.V. innovation, where Honda was floundering.
Some said Mr. Mibe was too slow to alter course even as market dynamics changed, because he had staked his legacy so closely to Honda’s electric transition.
Mr. Mibe also struggled to bring Honda’s engineers along, said Shigeo Makino, an automotive critic in Tokyo. Many engineers had spent their careers working on world-class engines and were reluctant to try something new.
During internal meetings, some were stunned when Mr. Mibe remarked, “We don’t have to make those oily, smelly engines anymore,” said Mr. Makino, who attended some of the discussions while working on a book about Honda technologies.
Some analysts and Honda insiders came to believe that authority at the top of the company was too unconstrained. Mr. Mibe served as both chief executive and board chairman, an arrangement that governance experts often criticize for concentrating power and potentially weakening independent oversight.
The governance concerns ran deeper than board structure, said Mr. Nakanishi, the analyst. Historically, Honda paired a chief executive who served as the big-picture visionary with a deputy responsible for running the day-to-day business. At Honda, however, “there was no single, powerful No. 2 to oppose Mr. Mibe,” Mr. Nakanishi said.
For the past two years, Honda has been stuck in a downward spiral.
In late 2024, the company entered merger talks with its struggling domestic rival, Nissan Motor. The discussions collapsed within months. In March, Honda and Sony scrapped development plans for their highly anticipated electric vehicles.
At a news conference that month, Mr. Mibe said that “despite trying everything,” the company would have to discontinue development of three flagship E.V. models, including the Saloon. Two months later, Honda reported its first annual net loss, weighed down by more than $9 billion in restructuring charges and write-downs tied to its bet on battery cars.
In recent months, Honda has unveiled measures aimed at restoring growth. The company said in May that it would double down on gasoline-electric hybrids, introducing 15 next-generation models by 2030. Combined with cost cuts and faster product development, the strategy is intended to return Honda to record profitability by the end of the decade, Mr. Mibe said.
Mr. Mibe also announced that he was taking a temporary 30 percent pay cut and would step down as chairman and leave the board’s nomination committee, while pledging stronger corporate governance. Of the 11 directors standing for election on Friday, a majority will be independent.
Also up for re-election is Mr. Mibe, who has said he feels responsible for rebuilding Honda’s competitiveness. While frustration with his leadership remains, Honda’s shareholder base is dominated by Japanese institutions that have traditionally supported management.
“There are still many Honda fans in America,” Mr. Makino, the automotive critic, said.
What Honda needs now, he said, is to give customers the products they want — namely, quality hybrids. For decades, Honda built its reputation on engineers who relished proving that difficult things could be done, he said.
“In the past,” Mr. Makino said, “those kinds of people were able to save Honda.”
Hisako Ueno contributed reporting.
