A year following the announcement of Ontario’s $15 billion electric vehicle endeavor, Honda Canada has decided to delay the project. The company revealed on Tuesday that its plans to establish an electric vehicle supply chain in Alliston, Ont., including an EV battery plant and revamped vehicle assembly facility, will be postponed for approximately two years.
In a statement to CBC News via email, Honda Canada spokesperson Ken Chiu noted that the postponement is due to the recent deceleration in the EV market. The company stated that it will assess the project’s timeline and progression in response to evolving market conditions. Despite this decision, Honda confirmed that it will not impact current employment or production at the Alliston manufacturing facility.
The Canadian EV project by Honda aimed to introduce a retooled assembly plant and an electric vehicle battery plant in close proximity, along with two critical battery parts facilities located elsewhere in Ontario. The initiative was anticipated to generate 1,000 new jobs at the primary plants, in addition to maintaining the existing 4,200 jobs at the assembly plant. The facility was expected to manufacture up to 240,000 vehicles annually by 2028.
Initially announced in April 2024 with the participation of then-Prime Minister Justin Trudeau and Ontario Premier Doug Ford, the project was slated to receive financial support from both the federal and Ontario governments. While Ottawa committed to providing around $2.5 billion in tax credits to the Japanese automaker, Ontario pledged up to $2.5 billion in direct and indirect assistance. However, Ontario’s economic development minister’s spokesperson clarified that the province has not disbursed any funds to Honda as of yet.
Ford expressed confidence in Honda’s commitment to continuing production in Ontario despite the temporary setback. He assured that the automaker assured him of their dedication to the expansion plans. Mayor Richard Norcross of New Tecumseth, part of Alliston, remained optimistic about the project’s future, acknowledging the understandable delay and emphasizing the importance of EV battery technology in the automotive sector.
The decision to postpone the project was influenced by various factors, including U.S. tariffs affecting the global auto industry, as highlighted by Flavio Volpe, president of the Automotive Parts Manufacturers’ Association. The impact of tariffs was underscored in Honda Motor Co.’s recent financial results, where the company reported a 24.5% decline in profit for the fiscal year ending in March. The automaker warned of further repercussions from U.S. President Donald Trump’s tariffs on its earnings.
Despite the challenges posed by tariffs and a slower-than-expected adoption of EVs, industry experts like David Adams of Global Automakers of Canada believe that electric vehicles remain pivotal for the future. While acknowledging the ongoing transition to battery electric vehicles globally, Adams emphasized the need for continued investments and consumer demand to align with environmental goals.
Gal Raz, a professor at Western University’s Ivey Business School, concurred that the delay was influenced by tariff issues and subdued demand for electric vehicles. He highlighted the importance of addressing consumer concerns regarding EV costs and charging infrastructure, underscoring the need for government intervention to facilitate EV adoption, as seen in countries like Norway.
Looking ahead, industry stakeholders urge a reevaluation of targets such as Canada’s zero-emission vehicle sales goal for 2035, considering the industry’s current challenges. The fluctuating landscape of U.S. tariffs and consumer preferences necessitates a strategic approach to navigate the evolving electric vehicle market.
