Honda's plans to delay electric vehicle factories 'a blow to the community'

Honda announced the postponement on Tuesday after forecasting a 59 per cent profit decline in the current fiscal year. But, it said, the delay of the massive EV supply chain investment will have “no impact” on production of Civics and CR-Vs and some 4,200 employees currently working at a giant manufacturing facility in Alliston, a township an hour’s drive north of Toronto. 

“The company will continue to evaluate the timing and project progression as market conditions change,” Honda Canada spokesperson Ken Chiu said. 

The pause is another hit to Ontario’s vulnerable auto sector, already suffering under trade war uncertainty. General Motors recently reduced shifts at one of its assembly plants while Stellantis temporarily laid off workers. 

“It’s not surprising,” said Robert Karwel, director of automotive customer success at data analytics firm J.D. Power, speaking of the Honda announcement.

“We don’t sell enough electric cars necessary to justify that type of investment without utilizing exports to United States and, frankly, exports globally as well to fill those plants,” he continued. 

“It’s going to be a bit of a blow to the community,” said Karwel, though he doesn’t think Honda is “going anywhere.” 

“This is a pause in spending, but it’s not a rollback.” 

Honda’s investment includes an electric vehicle assembly plant as well as a new stand-alone battery manufacturing plant at Honda’s facilities in Alliston. 

Local residents were disappointed by the project delay, said Richard Norcross, mayor of New Tecumseth (the municipality encompassing the township of Alliston).

“We were just hoping to gain a lot more employment.” 

Honda is the largest employer in the region, added Norcross, whose office was flooded with calls from local businesses and workers trying to understand the impact Honda’s decision will have on their lives. 

Just last month, reports that Honda was moving some of its production to America had rocked fearful locals. (The auto manufacturer later denied the rumours). 

Unifor, the union representing about half of all auto assembly employees in Canada, said it “does not represent workers at the Honda Alliston plant, but does represent members in the plant’s supply chain and takes any threat to Canadian auto jobs as a matter of grave importance,” according to an emailed statement. 

“Trump’s rollback of EV policies and his punishing tariffs on Canadian-made vehicles are killing jobs week after week and threatening the future of our industry,” Unifor president Lana Payne said in the statement. 

Premier Ford said he had talked to Honda officials about the delayed project that was intended to produce 240,000 vehicles annually and create another 1,000 jobs at Honda in Alliston. There was to be an EV assembly plant and feeder factories with thousands more spinoff jobs in parts production and construction of the new plants.

“They promised us they’re going to continue on with their expansion,” the premier said in Pickering Tuesday. “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.”

The existing Honda plants in Alliston produce about 400,000 Civics and CR-Vs a year. 

The Ontario and federal governments were to each pony up $2.5 billion toward the EV project, but provincial officials said none of that money has flowed yet.

Chiu, the Honda Canada spokesperson, said ground preparations had begun at the Alliston site, but not actual construction work.

The $15-billion Honda EV plan dwarfed the $5-billion Stellantis EV battery plant now operating in Windsor by the parent company of Chrysler, Dodge and Jeep and the $7-billion Volkswagen EV battery plant under construction south of London near St. Thomas. Both plants are in line for billions of dollars in subsidies and tax credits from the federal and Ontario governments. 

There have been other snags in the move to EVs as sales growth has been slower than expected.

Just over a year ago, Ford said it would delay EV production at its Oakville assembly plant by two years until 2027. That factory was granted up to $295 million in taxpayer support from each of the Ontario and federal governments.

In the legislature’s daily question period, New Democrat Leader Marit Stiles accused Ford of shrugging his shoulders at the news.

“This government hasn’t woken up to the reality of what we’re facing today,” Stiles said, calling for a plan to save manufacturing jobs in the face of American tariffs and high unemployment numbers. “Where’s the fight that this government talked about during the election?” 

The postponement is a “gut punch,” Green Leader Mike Schreiner said as opposition parties blamed Ford’s Progressive Conservative government for axing subsidies for motorists to purchase EVs and for not building up a better charging network, such as requiring EV chargers installed in all new homes.

Liberal Leader Bonnie Crombie questioned whether the Ford government’s heavy bet on EVs with Honda and other automakers was a “risk” given how anticipated demand has not panned out. 

Ford, who was not in question period, told reporters the government will hold all auto manufacturers given provincial aid to their job-creation promises.

“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,” he said.