Honda Canada Pauses Plans for $15B Electric Vehicle Project in Ontario

Honda employees work along the vehicle assembly line before an event announcing plans for a Honda electric vehicle battery plant in Alliston, Ont., on April 25, 2024. The Canadian Press/Nathan Denette

Honda Canada is delaying a $15 billion investment project in electric vehicles in Ontario, including a planned EV battery manufacturing facility and an upgraded vehicle assembly plant.

The news was made public during a May 13 Honda Global press conference to announce the company’s financial results for its latest fiscal year, which ended on March 31.

“Looking ahead, the growth of the electric vehicle market has slowed more than initially expected, making it difficult to anticipate further progress,” Honda CEO Toshihiro Mibe told investors during his presentation. “Therefore, we have decided to postpone large-scale investments in Canada.”

Honda Canada spokesman Ken Chiu said Honda is planning an approximate two-year postponement of the comprehensive value chain investment project in Ontario.

“The company will continue to evaluate the timing and project progression as market conditions change,” Chiu said in a May 13 statement, adding that the decision will not affect current employment at the Honda manufacturing plant in Alliston, Ont.

Honda’s Canadian project includes an EV manufacturing plant and a battery manufacturing facility in Alliston. Construction started last fall and the EV factory was set to kickstart production in 2028. Once fully operational, it would be able to produce 240,000 EVs annually while the battery manufacturing plant would have a capacity of 36 gigawatt hours.

The Japanese company had also begun work on a separator factory last November in Port Colborne, Ont., as part of a joint venture with Asahi Kasei, which is also headquartered in Japan. Commercial production at the $1.7 billion facility was originally projected to start in 2027.

Honda’s Canada operations were also set to include a cathode active material (CAM) plant and precursor cathode active material (pCAM) factory at an undisclosed Ontario location in partnership with Posco Chemicals. CAM is a key component of lithium-ion batteries found in electric vehicles.

Both the Port Colborne facility and the CAM plants were to be key parts of the supply chain for Honda’s Alliston EV manufacturing facility.

The project was first announced in April 2024 at an event that included then-Prime Minister Justin Trudeau and Ontario Premier Doug Ford and was to receive support from the federal and Ontario governments.

Both the federal government and the province committed to a $2.5 billion investment in the Japanese automotive manufacturer’s Ontario supply chain.

Premier Ford has pledged to hold “accountable” auto companies that have received government funding.

“Each auto manufacturer, anything that we’ve given them, we’re going to make sure that they’re held accountable and they continue manufacturing automobiles right here in Ontario,” Ford said during an unrelated May 13 press conference in Pickering, Ont.

“When I’ve talked to Honda, they promised us they’re going to continue on with their expansion. They’re going to keep that facility moving forward, so we‘ll just see how that moves forward. But we’re very confident that we’ll continue producing Honda vehicles here in Ontario.”

Honda Outlook

Honda Global said its profit for the latest financial year dipped 24.5 percent from the year prior and noted that U.S. President Donald Trump’s tariffs will worsen its earnings.

The Tokyo-based automaker said its annual profit totalled 835.8 billion yen (US$5.6 billion), down from 1.1 trillion yen in the previous year. Annual sales edged up 6.2 percent to nearly 21.69 trillion yen (US$147 billion).

Honda executive vice-president Noriya Kaihara said U.S. tariffs would be harmful, erasing 650 billion yen (US$4.4 billion) from its operating profit for the fiscal year through March 2026. This is primarily due to the tariffs imposed by the United States on automobiles imported from Canada and Mexico. Honda’s exports of vehicles from Japan to the United States are minimal.

Officials emphasized that significant uncertainties remain, but said it was essential to offer a realistic outlook.

Mibe said Honda will do its best to reduce the effects of tariffs. In the long term, Honda intends to shift automobile manufacturing to its facilities in the United States and reevaluate its investment strategies. Mibe told reporters that all decisions will be made “very carefully.”

The Canadian Press and The Associated Press contributed to this report.