Honda Canada says it is halting plans for a $15 billion electric vehicle project for two years.
A company spokesperson told Reuters that the decision was made largely due to a slowdown in market demand.
The news comes as Honda’s profit for the fiscal year through March slipped 24.5 per cent from the previous year, as its vehicle sales in China dropped. The Japanese automaker warned Tuesday that U.S. President Donald Trump’s tariffs will worsen its earnings.
Honda Canada announced in April 2024 its intentions to build an electric vehicle battery plant near its auto manufacturing facility in Alliston, Ont. The Honda EV battery plant set to be built in St. Thomas, Ont. comes with a $7-billion capital price tag.
Just last month, Honda released a statement refuting reports that it planned to move some of its production from its plant in Alliston, Ont., to the U.S. in response to Trump’s tariffs.
The report by the Nikkei financial newspaper said the company was considering shifting enough Honda CR-V and Honda Civic production to the U.S. to meet 90 per cent of U.S. sales with vehicles produced there.
Automakers baffled by Trump’s EV stance as some scale back electrification plans
Chief Executive Toshihiro Mibe said Honda will do its best to minimize the impact of tariffs. In the long term, Honda will transfer auto production to U.S. plants and rethink its investment plans.
He also said Honda was sticking to its plans to produce more electric vehicles.
Unsold 2025 Prologue electric utility vehicle is charged outside the showroom of a Honda dealership Wednesday, Sept. 4, 2024, in Highlands Ranch, Colo. (AP Photo/David Zalubowski)
“Although the automotive industry is in a very difficult situation, we will definitely look for new directions of growth through strategic partnership,” Mibe said at a press conference.
Honda and Nissan announced in December that they would hold talks to set up a joint holding company. Mitsubishi Motors Corp., another Japanese automaker, had said it was considering joining that group. However, the plans quickly unravelled, with Nissan saying it wanted out because it would be at a disadvantage.
Honda is projecting a 70 per cent plummet in profit for the fiscal year through March 2026, at 250 billion yen ($1.7 billion), on 20.3 trillion yen ($137 billion) in sales, down six per cent.
Nissan announced on Tuesday that the company is slashing about 15 per cent of its global workforce, or about 20,000 employees, as the Japanese automaker reported a loss for the fiscal year.
With files from The Associated Press
