Honda Announces $11B Investment to Expand EV Complex in Canada

Story was updated on April 26 with new comment from Honda Motor Co. 

In a much-anticipated announcement, Honda Motor Co. said April 25 that an estimated $11 billion will be spent to expand its existing auto manufacturing operations in Alliston, Ontario, to supply and build electric vehicles in what it described as “Canada’s first comprehensive electric vehicle supply chain.”  

The investment, which includes funding from corporate partners, the province and new federal tax credits, will feature an electric vehicle assembly plant, the first of its kind for the company, it said, as well as a new stand-alone battery manufacturing plant with a capacity of 36 GWh per year.

Honda said it will also build a cathode active material and precursor processing plant through a joint venture with South Korea-based POSCO Future M Co. Ltd., and a separator plant in partnership with Japan’s Asahi Kasei Corp. Honda said it “has begun the process of evaluating the scope of its investment and completing negotiations with its joint venture partners,” which it expects to finalize in six months. 

Honda estimates its corporate investment at 60% to 70% of the total, said spokesman Ken Chiu.  

Canada Prime Minister Justin Trudeau called Honda’s EV investment “a vote of confidence in Canada,” and Ontario Premier Doug Ford said it will “bring back manufacturing” to bolster the provincial economy. Both say this is the largest ever single investment in Canada’s auto sector.

Once fully operational in 2028, the new assembly plant will produce up to 240,000 vehicles per year. Chiu said size dimensions and contractors for the new facilities would be released as the build phase approaches.

Planning for the new facilities is expected to finalize in the next six months, said Chiu. “The amount of investment in each area will change as we examine details. As of now, we are assuming that the investment in the battery plant will be the largest.”

The funding will include $1.83 billion from the recently enacted 10% federal EV Supply Chain investment tax credit for businesses that invest across key segments of the electric vehicle supply chain, and from the proposed 30% Clean Technology Manufacturing investment tax credit. Up to $1.83 billion in direct and indirect funding will also come from the Ontario government for construction and expanded site infrastructure. 

Canada and Ontario previously made matching investments of $131.6 million to help Honda Canada retool the plant in Allison, located about 60 miles north of Toronto, to produce hybrid EVs, now estimated at about 4 million squaew feet.

Honda was the first Japanese automaker to produce cars in Canada, starting its unit there in 1969 and launching production at the Ontario plant in 1986. 

The company makes hybrid cars in the U.S. and said it plans to start manufacturing its first American-made fully electric vehicles in Marysville, Ohio next year, according to Bloomberg.

Honda said it expected to add more than 1,000 new manufacturing jobs to the current 4,200-person workforce at its two existing Canada plants but did not disclose the number of construction jobs anticipated in the expanded project first phase. ENR also could not confirm by press time whether the expansion will be built with union labor, the names of the design and construction contractors for the project or the status of those selections.

Honda said it has set a goal to make EVs make up 100% of vehicle sales by 2040.

“Following the initiative to establish our EV production system capability in the U.S., we will now begin formal discussions toward the establishment of a comprehensive EV value chain here in Canada, with the support of the governments of Canada and Ontario,” Honda Global CEO Toshihiro Mibe said in a statement. “We will strengthen our EV supply system and capability with an eye toward a future increase in EV demand in North America.”

The Honda EV vehicle battery plant will be the third in Ontario—in addition to a Volkswagen facility in St. Thomas that is set to start construction in 2025 and a Stellantis LG plant in Windsor under way since last year.