How Honda Is Trying to Recover From an EV Bust

Summary

WSJ What’s News – PM Edition
Episode: How Honda Is Trying to Recover From an EV Bust
Date: May 15, 2026
Host: Alex Osola

---

Episode Overview

This episode zeros in on Honda’s unprecedented financial loss and its faltering electric vehicle (EV) strategy, providing a deep dive on how the company plans to rebound. Alongside the Honda story, the episode touches on major political, market, and tech developments, from political upheaval in the UK affecting markets, to U.S. immigration enforcement shifts, to the latest blockbuster investments in AI and the impending SpaceX IPO.

---

Honda’s Electric Vehicle Bust and Recovery Plan

Segment Begins: 07:56

Key Points:

• Honda posted a $2.7 billion annual loss—its first as a public company—driven in part by a massive $10 billion loss from scrapping its U.S. EV strategy.
• The EV bust was attributed to a sudden policy shift in the U.S., leading to a collapse in EV demand.
• Honda is pivoting to hybrids, planning new model releases and integrating EV technology into its hybrid lineup.

In-Depth Discussion:

• Strategic Misstep and Market Shock (07:56–09:16)

  • Honda had committed to an all-EV lineup by 2040, investing heavily in new factories and assembly lines.
  • “They had locked in on a plan to basically switch their entire lineup over to EVs by the time 2040 rolled around... What happened then? Well, we had a change in leadership in the US and all of those policies that were designed to encourage people to buy EVs went away. And as a result, EV sales plummeted.” – Sean McLean (08:37)
  • Facing disastrous economics, Honda chose to cancel the U.S. EV program rather than sell vehicles at unsustainable losses.

• Hybrid Comeback (09:19–09:50)

  • Honda is fast-tracking two new hybrid models with improved fuel efficiency, leveraging technology developed for EVs.
  • Sean McLean explains: “Hybrids are one of the segments of the car market in the US that are growing rapidly. These vehicles, even if they're SUVs, get anywhere between 35 to 50 miles per gallon. And with gas being where it is, certainly people are going to want to buy them.” (09:39)
  • The strategy signals a more cautious, incremental approach to vehicle electrification in volatile policy environments.

---

Political and Market Volatility in the UK

Segment Begins: 00:42, Deep Dive at 02:35

Key Points:

• UK political drama intensifies as Andy Burnham, Mayor of Greater Manchester, announces a parliamentary bid, potentially challenging Prime Minister Keir Starmer from the left.
• Bond markets react sharply, with UK government borrowing costs hitting post-2008 highs.

Discussion Highlights:

• “Investors are worried that Keir Starmer is going to lose his position... The worry is that this is going to lead to more borrowing for the UK, more spending. And the UK comes into this with extremely fragile government finances. So this political drama is really the last thing that the UK needs right now.” – Chelsea Delaney (02:39)
• Burnham’s statement, “We need to get beyond this thing of being in hock to the bond market,” unsettled investors concerned about fiscal discipline. (03:27)
• The UK has faced significant political instability, with five Prime Ministers in seven years, driven by stagnating economy, high debt, and costly welfare state. (04:03)

---

U.S. Political and Policy Developments

Segment Begins: 04:38

Key Points:

• Louisiana Republican Senate primaries test Trump’s influence; Trump-backed Julia Letlow challenges incumbent Bill Cassidy.
• At the Department of Homeland Security, Secretary Mark Wayne Mullen works to make ICE enforcement less publicly visible, despite ongoing deportations.

In-Depth Discussion:

• “He has directed ICE not to launch any major operations... we haven't seen any really major arrest operations in big cities like Minneapolis since January.” – Michelle Hackman on Mullen’s quieter enforcement approach (05:36)
• Daily ICE arrests have decreased since last winter, fueling dissatisfaction among Trump’s base: “Members of Trump's base are really upset about this because they think, you know, this is a core promise he made. Our voters are not going to come support us if we don't fulfill this promise.” – Michelle Hackman (06:47)

---

Tech and Market News Roundup

Segment Begins: 09:50

Major Headlines:

• Bill Ackman’s Pershing Square invests in Microsoft, citing undervaluation of its OpenAI partnership.
• Anthropic’s fundraising rockets past $30 billion, targeting a $900 billion valuation ahead of a possible IPO.
• SpaceX reportedly aims for a June 12 IPO, expected to set records with plans to raise $80 billion+.

Market Snapshot:

• Both UK and U.S. bond yields soared, as political drama and Middle East instability spark inflation and rattle equities.
• Chip stocks led a broad sell-off, with the NASDAQ down 1.5%.

Notable Moment:

• “Chip stocks in particular sold off coming after a rally that's been going strong for the past month. In overall trading today, all the indexes fell more than 1%. The NASDAQ led the losses, dropping one and a half percent.” – Alex Osola (11:08)

---

Memorable Quotes & Moments

• “Things haven't been this bad for Honda in basically forever.” – Sean McLean (00:39)
• “Burnham, he said last year, we need to get beyond this thing of being in hock to the bond market. And that freaked out a lot of bond market investors.” – Chelsea Delaney (03:27)
• “He has directed ICE not to launch any major operations... we haven't seen any really major arrest operations... since January.” – Michelle Hackman (05:36)
• “Hybrids are... growing rapidly... anywhere between 35 to 50 miles per gallon. And with gas being where it is, certainly people are going to want to buy them.” – Sean McLean (09:39)

---

Timestamps for Key Segments

• 00:33 — Honda’s historic losses preview
• 02:35 — UK political market turmoil: Explainer by Chelsea Delaney
• 05:34 — U.S. immigration enforcement strategy shift: Michelle Hackman
• 07:56 — Honda’s EV bust and hybrid pivot: Sean McLean
• 09:50 — AI and IPO news: Microsoft, Anthropic, SpaceX
• 11:08 — U.S. market recap and chip stock selloff

---

Summary:
This episode weaves together Honda’s costly misstep in the EV market and their hybrid pivot, dramatic UK politics shaking bonds, evolving U.S. immigration enforcement, and blockbuster moves in tech and markets—all signaling the unpredictability and interconnections of the global economy and policy landscape.

Transcript

[IBM Representative]

So there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now a global workforce of 300,000 can use AI to fill their HR questions, resolving 94% of common questions, not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business. IBM.

[Alex Osola]

After a big bet on electric vehicles went wrong, Honda is facing its toughest challenge in decades.

[Sean McLean]

Things haven't been this bad for Honda in basically forever.

[Alex Osola]

Plus, British investors are spooked after news of a looming contest between Prime Minister Keir Starmer and left wing politician Andy Burnham.

[Chelsea Delaney]

He said last year, we need to get beyond this thing of being in hock to the bond market. And that freaked out a lot of bond market investors.

[Alex Osola]

And the Wall Street Journal has learned that SpaceX is planning to go public in a month in what stands to be the biggest IPO ever. It's Friday, May 15th. I'm Alex Osola for the Wall Street Journal. This is the PM edition of what's news, the top headlines and business stories that move the world today. Disgraced Hollywood producer Harvey Weinstein's third New York trial has ended in a mistrial. An aspiring actress had alleged that Weinstein raped her in a Manhattan hotel room in 2013. Now a jury has deadlocked for the second time over whether Weinstein raped the woman. After a 2020 conviction was overturned by a higher court. Prosecutors have 30 days to decide whether to retry the case. Weinstein is still expected to be sentenced in the coming months on a previous criminal sexual act conviction. He faces up to 25 years. And he was also sentenced in California to 16 years in prison for sex crimes. He's appealing that conviction. Across the pond, a political drama has been brewing and hitting the markets in the uk. Last night, the left wing mayor of Greater Manchester, Andy Burnham, said he planned to stand for election to Parliament. That opened a path for him to take on current Prime Minister Keir Starmer. It would be the first time a sitting Labour Party prime minister has been challenged while in office. Journal reporter Chelsea Delaney joins me now from London. Chelsea, I want to talk about what these markets are doing. UK bonds have slid and UK government borrowing costs have climbed today to their highest level since the 2008 financial crisis. What is investors concern here?

[Chelsea Delaney]

Investors are worried that Keir Starmer is going to lose his position as Prime Minister and whoever replaces him, that person is going to have to increase spending to sort of galvanize the public. So the worry is that this is going to lead to more borrowing for the uk, more spending. And the UK comes into this with extremely fragile government financ finances. So this political drama is really the last thing that the UK needs right now. And that's why we're seeing this have such a big impact on the UK markets.

[Alex Osola]

How much of investors reaction has to do with their concern about having Burnham in particular in the pmc or is it losing Starmer?

[Chelsea Delaney]

We've seen this big sell off over the past day after it became clear that Andy Burnham was making a bid at the Prime Minister role. So it's clear that what we're seeing over the past 24 hours is related to Burnham. And Burnham, he said last year, we need to get beyond this thing of being in hock to the bond market. And that freaked out a lot of bond market investors because the UK has a lot of debt and needs to borrow a lot of money and it wants its politicians to really be keeping the government finances in line. And so I think a lot of investors are worried that he is not going to be as disciplined about government spending as Starmer and his cabinet have been.

[Alex Osola]

By our count, the UK has had five Prime Ministers in seven years. What has been driving this instability?

[Chelsea Delaney]

The instability is, is not totally unique to the uk. Across Europe and across the world, you've seen political systems become much more polarized and the UK has a lot of constraints on it just because the economy has been basically stagnating for a long time. Debt levels are high and they have a very large welfare state that it's getting very expensive to continue funding. So these politicians have room to make big changes and people feel very unhappy about that.

[Alex Osola]

That was WSJ reporter Chelsea Delaney. Thanks, Chelsea.

[Chelsea Delaney]

Thanks for having me.

[Alex Osola]

And back to the politics on this side of the Atlantic. Louisiana voters go to the polls tomorrow. On the ballot for the Senate Republican primary is Representative Julia Letlow, who's trying to unseat three term Senator Bill Cassidy. Trump has endorsed Letlow, who appears to be leading in the polls. It's a test of President Trump's continued sway over the GOP and a sign of where the party might be headed. In Washington, Homeland Security Secretary Mark Wayne Mullen has been cleaning house in his department. He's fired officials closely associated with his predecessor Kristi Noem, and reviewed her spending decisions. For more on how those efforts are going, I'm joined now by WSJ reporter Michelle Hackman. Michelle Mullen has been in this job at DHS for almost two months now. He took over a department that was in turmoil. Noem was pushed out and there were regular protests against ice. After some high profile deaths of Americans, has Mullen carried out his agenda of making DHS more low key?

[Michelle Hackman]

I think the most noticeable difference is we've been told that he has directed ICE not to launch any major operations. It's hard to talk about sort of what's not happening, but we haven't seen any really major arrest operations in big cities like Minneapolis since January. So I think he has actually succeeded in making DHS a slightly quieter and less noticeable agency. But hundreds of immigrants are getting arrested and deported every day. People are being arrested at their homes, outside their homes, at their workplaces. It's just not something that is happening as publicly to be caught, you know,

[Alex Osola]

by television cameras on the campaign trail. Trump said he could deport as many as 20 million people. The administration hasn't come anywhere close to that so far. And now you're reporting that the number of daily ICE arrests, which as you say is still happening, but the number has fallen by several hundred since last winter. What has the reaction been in the White House to that information?

[Michelle Hackman]

There are still many arrests happening, but it's not nearly as many as Trump promised. President Trump himself have expressed, you know, we went too far, we need to pull back a little bit. And that's what we're seeing right now. But certainly members of Trump's base are really upset about this because they think, you know, this is a core promise he made. Our voters are not going to come support us if we don't fulfill this promise.

[Alex Osola]

That was WSJ reporter Michelle Hackman. Thanks, Michelle.

[Michelle Hackman]

Thank you.

[Alex Osola]

And we should note that a DHS spokeswoman told WSJ that ICE wasn't slowing down. Coming up, the latest AI investments, from Bill Ackman's bet on Microsoft to Anthropic's multibillion dollar round of fundraising and the date that SpaceX has in mind for its massive IPO. Those stories and more after the break.

[Capital Group Announcer]

Some of the best lessons don't come from a classroom. They come from experience. On the Power of Advice, a new podcast series from Capital Group. You'll hear from CEOs, investors and founders about how they built careers, took risks and reinvented themselves. If you're starting your own journey, this is the kind of advice you won't want to miss. Available wherever you get your podcasts published by Capital Client Group Inc.

[Alex Osola]

Japanese carmaker Honda has managed to stay profitable through a global financial meltdown, natural disasters, and the pandemic. Now, though, it's facing some of its steepest challenges in the nearly 70 years it's been a public company. This week, it reported a $2.7 billion annual loss, its first as a public company. Sean McLean covers autos for the Journal and joins me now. Sean, it seems like one big challenge for Honda is with its electric vehicles in the US that annual loss that I mentioned came in part from a $10 billion loss for scrapping its EV plans. What happened there?

[Sean McLean]

It's very bad timing for Honda. So what they said was that they had locked in on a plan to basically switch their entire lineup over to EVs by the time 2040 rolled around. And what that entailed was building new factories, building new assembly lines, lining up new models, and they'd bought expensive pieces of equipment. And all of those things were rolling in to Honda around 2024 and early 20. And what happened then? Well, we had a change in leadership in the US and all of those policies that were designed to encourage people to buy EVs went away. And as a result, EV sales plummeted. And Honda says that they realized that they had two choices. They could try to sell these EVs at a loss or they could cancel the entire program and eat, you know, a massive write down.

[Alex Osola]

So how is the company confronting these challenges?

[Sean McLean]

Honda is bringing to market next year two new hybrid models, and they're trying to employ some of the technology that they developed for their EVs and roll them out in new hybrids. Now, hybrids are one of the segments of the car market in the US that are growing rapidly. These vehicles, even if they're SUVs, get anywhere between 35 to 50 miles per gallon. And with gas being where it is, certainly people are going to want to buy them. So Honda's trying to inject a little bit of pep into their financial engine by launching some new hybrid models quickly.

[Alex Osola]

That was WSJ reporter Sean McClain in tech. Bill Ackman's Pershing Square has taken a new stake in Microsoft. Ackman said today that investors were undervaluing Microsoft, especially its partnership with OpenAI. AI giant. Anthropic is also winning new investments. The Journal has learned that Anthropic is raising more than $30 billion at a $900 billion valuation. The deal hasn't closed, and the company could end up raising significantly more. Anthropic raised another $30 billion, just three months ago and has raised more than 90 billion since the beginning of 2025. It's been fundraising ahead of an expected IPO. WSJ has learned that SpaceX has a date in mind for its own IPO, June 12. It's expected to be the biggest initial public offering of all time, with Elon Musk's rocket company aiming to raise as much as $80 billion or more. That's only a month away, but the timing could still change. Markets today were all about bonds. You already heard about how a messy political situation in the UK is driving up bond yields there. Well, in the US the 10 year treasury yield had its biggest one day jump in more than a year. The 30 year yield closed at its highest level in nearly two decades. Investors are worried that a prolonged impasse in the Middle east war will keep oil prices high and make inflation even worse. The bond market action hurt investors desire for stocks. Chip stocks in particular sold off coming after a rally that's been going strong for the past month. In overall trading today, all the indexes fell more than 1%. The NASDAQ led the losses, dropping one and a half percent. In New York, the country's busiest commuter railroad may grind to a halt tonight. Rail workers at the Long Island Railroad are expected to strike at midnight over their pay. And if there's no breakthrough in the bargaining, there could be some painful commutes for hundreds of thousands of New Yorkers next week. The railroad's operator, the mta, says it has planned contingency shuttle buses, but it's already warning that they will be insufficient. The MTA is asking people to work from home if there's a strike. And that's what's news for this week. Tomorrow you can look out for our weekly markets wrap up what's news in markets Then on Sunday we'll be headed to Pennsylvania to see see what high prices for groceries and gasoline could mean for a competitive house race there. That's in what's New Sunday and we'll be back with our regular show on Monday morning. Today's show is produced by Danny Lewis and Anthony Bancy with supervising producer Tali Arbel. Michael Lavelle wrote our theme music. Aisha El Muslim is our development producer. Chris Sinsley is our deputy editor. And I'm Alex Osola. Have a great weekend and thanks for listening. Foreign,

[Columbia Sportswear Announcer]

You can't reason with the sun. Trust us, we've tried this summer. It's time to put that angry ball of fire on mute. Columbia's Omnishade technology is engineered to protect you from the sun's harsh rays that can burn and damage your skin. The sun is relentless, but so is our gear. Level up your [e-mail] to spend more time outside and less time slathering on aloe lotion. You're welcome. Columbia engineered for whatever.