Honda Canada has “indefinitely suspended” its plans for a $15-billion electric vehicle complex that could have created 1,000 new jobs in Ontario.
The move to shelve the project won’t affect current jobs or production levels at Honda’s manufacturing facility in Alliston, Ont., the automaker said in a release Thursday as it announced the first annual loss in company history. The company lost $2.7 billion (U.S.) in the fiscal year ending March 31.
Honda cited “evolving business conditions, a change in external resource strategy and shifting customer demand” as key factors behind the decision to halt the project that would have included a vehicle assembly plant and battery production facilities.
Both the provincial and federal governments committed to contributing upwards of $5 billion to fund the manufacturing complex in 2024, but Honda said no money has been transferred.
“Based on our revised strategic objectives, we have determined that an indefinite suspension of the value chain project is appropriate at this stage,” the automaker wrote in its statement. “We will continue reviewing our future procurement and business strategies, while carefully monitoring market conditions.”
Honda tipped its hand in March when it announced it would be taking a $21 billion writedown as it revamps its global strategy to focus less on electric vehicles.
The Alliston plant was originally designed partly to take advantage of green tax credits in the United States. But U.S. President Donald Trump scrapped the credits in September, and has unveiled a series of tariffs that would impact the profitability of the plant.
In March, the company said the global $21 billion writedown was because of increasing competition from other Asian manufacturers, a changing global trade environment thanks to U.S. tariffs, and slumping demand for EVs, partly because of the elimination of the U.S. tax incentives.
In interviews with the Star last week after Japan’s leading business paper Nikkei reported on Honda’s move to back away from the Alliston plant, automotive analysts said it’s no surprise to see manufacturers pulling back from EV production.
“We’re in the bottom of the barrel looking up,” said Robert Karwel, head of automotive research for J.D. Power Canada. “Will the market share increase? Yes. But not nearly as quickly as the government has been hoping.”
Karwel said EVs are still more expensive than comparable gas models, they’re less profitable for manufacturers and dealers, and they’re just not selling as quickly.
And, he added, Canada’s too small a market to support an assembly plant solely with domestic sales, particularly for EVs, which still only have about six per cent of the market here.
With a review of the Canada-U.S.-Mexico Agreement on trade looming this year, that makes for a challenging investment dynamic, Karwel said.
Ryan Robinson, who leads automotive research at Deloitte Canada, said the future of the Canadian automotive assembly industry is cloudier than ever.
“There’s a bit of paralysis going on. All of the investments that have been made in Canada over the last several decades were made under the assumption that we had free and open access to a market that’s ten times our size,” said Robinson. “We were going to be sending 90 per cent of our production to the U.S.”
And, added Robinson, it’s no slam-dunk that Canada would be able to find alternative markets for vehicles produced in this country.
“There are other export markets, but very few where I can make an argument for Canadian manufactured-cars,” Robinson said. “And certainly not in the kind of volumes that would fill the gap left by not having free access to the U.S. market.”
Unifor, the union represening workers in the Honda supply chain, called the suspension “the latest casualty of Trump’s anti-EV policies” and 25 per cent tariffs on Canadian-made vehicles.
“These tariffs are killing jobs, freezing investment, and putting the future of Canada’s auto industry at risk,” the union wrote in a post online. “Let’s be perfectly clear: until the U.S. reverses its auto tariff policy on Canada, the future of this industry is bleak.”
Honda’s decision follows the idling of assembly plants in Ingersoll and Brampton and the loss of the third shift in Oshawa, causing Unifor to raise alarms over the state of Canada’s automotive industry. The Japanese automaker says it built roughly 400,000 Civic and CR-V models in Canada last year, 60 per cent of which were hybrid vehicles.
In February, Stellantis stepped back from its ownership stake in Windsor’s EV battery plant NextStar as part of a $35.5-billion global writedown on what it admitted were overly ambitious EV plans.
The union is calling for “bold action” to protect jobs, secure future investment and resolve the tariff war with the U.S.
“Stubbornly defending a global trade order that no longer exists, won’t cut it. Until a resolution is found, government must use every investment, procurement and job protection tool at its disposal to keep plants open,” the post continued.
“As global vehicle competition intensifies, especially from China, and U.S. trade aggression escalates, Canada must fight for every auto job, every assembly line, and our place in the EV evolution. The future of our industry depends on it.”
More to come.
