The federal government, Ontario and Honda Canada are investing a total of $867 million to help boost hybrid vehicle production at the company’s assembly plant in Alliston as well as reviving plans to produce engines at the plant.
The company made the announcement Monday morning, saying they’re investing $398 million, with the federal government adding $313 million and Ontario a further $156 million.
“This renewed investment reinforces Canada’s critical role in Honda’s North American growth and hybrid-electric vehicle strategy and helps position our operations for long-term competitiveness and future opportunities,” Honda Canada president Dave Jamieson said in a press release.
Honda’s investment includes $166 million in capital costs to retool the Alliston plant.
At the same time, Honda announced plans to build a $3 billion (U.S.) factory in central Ohio to manufacture its next-generation hybrids, boosting its output capacity for the popular vehicles.
The Ohio plant is expected to start production in 2029 and expand output by 240,000 vehicles a year. Honda has been mulling over the decision for months as part of a strategic pivot earlier this year away from all-electric vehicles.
It aims to introduce 15 new hybrids globally by March 2030, primarily targeting North America.
“These investments strengthen America’s role as a cornerstone of Honda’s global future,” Bob Nelson, executive vice president of the company’s U.S. business operations, said in a statement.
Monday’s Alliston announcement comes just five months after Jamieson warned that the company’s future in the country was at risk because of U.S. president Donald Trump’s tariffs, Canadian emissions standards, and opening the market to Chinese electric vehicles.
Earlier this year, the company also announced it was putting its $15 billion plans for EV assembly and engine production in Alliston on indefinite hiatus.
Investing in production of hybrids is a solid business strategy, given that they’re the fastest-growing segment of the new vehicle market, said automotive analyst Robert Karwel.
“That Honda is putting money into Alliston is no surprise, given where the hybrid market is,” said Karwel, head of automotive research at J.D. Power Canada.
While traditional gasoline-powered vehicles still account for 71 per cent of sales in Canada, Karwel estimates that hybrids are roughly 18 per cent of the market.
“It’s a growing share,” said Karwel. Part of the reason? Cost. Karwel said hybrids are roughly $3,000 to $5,000 more than comparable gasoline-powered models, while EVs are up to $10,000 more.
In a written statement Monday, federal industry minister Melanie Joly said the government aims to ensure Canada remains “an auto nation.”
“This investment will strengthen our automotive supply chains, support thousands of well-paying jobs in Ontario and across the country,” Joly said, “and help build a strong Canadian auto sector where workers build the cars of the future.”
Ontario Premier Doug Ford said the investment was aimed at helping what he called the engine of the province’s economy.
“For generations, Ontario’s autoworkers have been the engine of our province’s economy as part of a supply chain supporting hundreds of thousands of good-paying jobs on both sides of the border,” Ford said. “As part of our plan to protect workers and businesses impacted by U.S. tariffs and fortify our industrial base, Ontario’s $156 million investment in Honda will directly support 4,000 workers, helping secure our position as a leader in the auto sector for decades to come.”
With files from Bloomberg
