Honda is addressing supply gaps and warns that China's rare earth supplies are emerging as a new risk. In the last nine months of 2025, Honda reported an operating loss of 267 billion yen ($1.7 billion), primarily due to changes in U.S. electric vehicle policies and increased global supply chain risks. Executive Vice President Noriya Kaihara noted that the expansion of global procurement and competition from emerging OEMs have exacerbated these risks. Honda plans a fundamental review of its strategy to rebuild competitiveness. In the third fiscal quarter, the company faced semiconductor shortages, which are easing, but rare earth supply chain risks are rising, particularly due to Chinese export restrictions. Honda is closely monitoring these risks and taking necessary measures, such as timely export applications, stockpiling critical components, and maintaining close supplier relationships. Long-term plans include redesigning components to eliminate rare earth elements, a process that will take years. Honda is also reforming supplier collaboration to better manage potential shortages, including multi-channel sourcing, inventory management, and upstream risk assessment. In cases of single-source procurement, Honda will enhance upstream supplier monitoring and establish buffer stocks to ensure business continuity.