Honda Motor Co. will spend C$15 billion ($11 billion) building electric vehicles north of Toronto, with Canadian lawmakers pledging significant financial support, according to a person familiar with the matter.
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(Bloomberg) — Honda Motor Co. will spend C$15 billion ($11 billion) building electric vehicles north of Toronto, with Canadian lawmakers pledging significant financial support, according to a person familiar with the matter.
The investment will be announced Thursday morning in Alliston, Ont., by Honda officials and government leaders, including Prime Minister Justin Trudeau and Ontario Prime Minister Doug Ford. Bloomberg News first reported on April 21 that Honda and the Canadian government were close to an agreement.
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For Honda, it’s part of a long-term bet on consumer demand for electric vehicles in North America. The Japanese company makes hybrid cars in the U.S. and has announced it will begin production of its first U.S.-made all-electric vehicles next year in Marysville, Ohio.
For Trudeau and Ford, the announcement is a key milestone in their push to secure Canada’s share of the North American auto business as the industry transitions to electric vehicles. The two politicians have already pledged tens of billions of dollars to persuade other manufacturers, including Volkswagen AG, to build massive battery factories for electric vehicles in the country.
Read more: Electric cars have reached the tipping point for mass adoption in 31 countries
In Thursday’s announcement, Honda promises to build a new battery assembly plant in Alliston, a city just over an hour’s drive north of Toronto that will produce gasoline-powered Honda CR-V and Civic models. Existing facilities there would be upgraded to accommodate electric vehicles, a person with direct knowledge of the plan said, on condition they not be identified.
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Honda also plans to invest in a cathode materials plant and a battery components plant in Ontario, but other companies will also be involved and the exact details will likely be announced later, the person said.
The federal government’s support for Honda’s investments comes in the form of tax credits for clean manufacturing and electric vehicle production. However, the exact cost to the treasury depends on how much Honda actually spends in Canada. The province of Ontario will subsidize some of the project’s capital costs and may also provide money for necessary infrastructure improvements such as new roads and sewers, the person said.
The subsidies are structured differently than those Canada promised last year to Volkswagen, Stellantis NV and Sweden’s Northvolt. These companies received contracts that cover a portion of the cost of each battery produced in their Canadian factories – effectively equal to the money available to electric vehicle battery manufacturers under the U.S. Inflation Reduction Act.
Honda has not been offered a production subsidy, government officials told Bloomberg. Trudeau has repeatedly said Canada can only afford to go so far in U.S. manufacturing incentives.
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