Honda Contemplates $18.4 Billion Investment for EV and Battery Plant in Canada

Honda Motor Co. Ltd. is reportedly contemplating a substantial investment exceeding $18.4 billion in the establishment of an electric vehicle (EV) plant in Canada.

Honda is actively exploring the prospect of constructing both an EV manufacturing facility and a battery plant within the Canadian landscape. This strategic move is part of Honda's broader initiatives to strengthen its position in the rapidly evolving electric vehicle market.

Honda is currently evaluating various potential sites for the envisioned facilities, with one of the options being adjacent to its existing plant in Alliston, Ontario. A final investment decision is anticipated by the conclusion of the year. However, Honda has not yet provided an official response to inquiries seeking confirmation or clarification.

A spokesperson for Industry Minister François-Philippe Champagne refrained from confirming any ongoing discussions between Honda and the Canadian government. Nonetheless, Minister Champagne acknowledged the reported possibility of Honda's significant investment as a positive reflection of Canada's growing reputation as a preferred green supplier and a global leader in the electric vehicle sector.

Champagne stated in a press release that the potential investment aligns with Canada's high-quality workforce and robust industry strength. He emphasized the country's commitment to green energy by referencing the abundance of renewable energy in Canada and the federal government's directive in December, mandating that all passenger vehicle sales be electric by 2035.

While Honda is in the process of reconfiguring a production plant in Ohio for electric vehicle production and has a collaborative agreement with LG Energy Solution to establish an electric vehicle battery plant in the same state, the report suggests that Honda might independently pursue the establishment of a battery plant in Canada. LG Energy Solution is already engaged in a partnership with automaker Stellantis to construct a $5 billion battery plant in Windsor, Ontario.

Canada has been successful in attracting major investments in the electric vehicle sector through generous subsidies. Notable projects include Volkswagen's battery plant in St. Thomas, Ontario, and Northvolt's facility near Montreal. These initiatives collectively represent a significant commitment amounting to tens of billions of dollars in subsidies, largely tied to production volumes.

In 2022, Honda had announced a $1.38 billion investment to upgrade its Alliston plant, positioning it as the lead facility for manufacturing the CR-V hybrid crossover vehicle. The potential investment in an EV plant in Canada aligns with Honda's broader strategy to enhance its presence in the electric vehicle market.

Although Honda is set to launch its first fully electric vehicle in Canada this year, named the Prologue, with limited quantities expected in the initial production year, the reported investment signals the automaker's proactive stance in furthering its capabilities in the electric vehicle segment. The move also underscores the global shift towards sustainable and electrified transportation.