Honda Being Forced to Compensate General Motors for Poor EV Sales

Honda’s EV results in the most recent financial quarter are creating an unexpected problem for General Motors: fewer orders for electric vehicles that Honda asked GM to build.

The Honda Prologue and Acura ZDX electric crossovers were co-developed with GM and share the same underlying platform used by the Chevrolet Blazer EV and Cadillac Lyriq EV, with assembly also handled by GM plants. But after Prologue and ZDX sales fell off a cliff, Honda reduced the number of cars it plans to order from GM.

According to a new report from Automotive News, the lower output means Honda will need to pay GM for the difference in procurement, meaning even as Honda rethinks its EV strategy, GM still gets paid for vehicles it doesn't have to build anymore.

The Acura ZDX is—or should I say was— built at GM’s Spring Hill plant in Tennessee, but Honda already decided to end the program prematurely. The ZDX lasted just one model year and totaled 19,411 sales. The Prologue, assembled at GM’s Ramos Arizpe facility in Mexico, showed stronger underlying numbers, but the latest quarter was a bloodbath.

Honda sold 39,194 Prologues in the U.S. last year, up 18.7 percent versus 2024, but in the fourth quarter, Prologue sales dropped 86 percent to 2,641 units, coinciding with the loss of federal EV tax credits.

Honda is now calling for what it describes as a “fundamental review” of its car strategy. The company recorded its fourth consecutive quarter of operating losses, and its consolidated profits fell 61 percent in its October-to-December fiscal third quarter. Over the first nine months of its financial year ending in March 2026, Honda’s EV-related write-offs and expenses grew to $1.71 billion, and it expects EV losses to reach $4.48 billion by the end of the fiscal year.

In the near term, Honda says it will try to offset the Prologue's sales slowdown by pushing more fleet sales, though that might mean leaning harder on incentives. The company is already spending heavily, with Honda putting more than $17,000 on the hood of each Prologue sold in the U.S. last month—yet sales amounted to just 664 units.

Longer term, Honda is moving away from this GM-based stopgap and toward a new in-house EV family. The next wave should be built around Honda’s “0 Series” architecture, starting with the Acura RSX crossover due to go on sale by the end of this year, followed by two Honda models called the 0 Series SUV and 0 Series Saloon.

The revision comes with a reset in expectations, too: Honda once targeted two million EV sales globally in 2030, but that projection has since been reduced to roughly 700,000 to 750,000.

Our Take:

Working with GM to develop Honda's first North American electric vehicles was a conservative play originally, but it's now costing Honda big. Not only is money flowing out the door to develop the "0 Series," but it's also being forced to compensate GM for the lack of Honda EV sales while having to pile cash on the hood of the Prologue just to keep them from stacking up on dealer lots. Hopefully, the financial losses don't start to show themselves in other areas of the business, namely Honda's reputation for quality and reliability.

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