Honda invests $15 billion in Ontario auto plants

Honda Motor is spending about $15 billion in Ontario to build four new vehicle and battery plants, the company and Prime Minister Justin Trudeau said on Thursday.

Honda is to build an electric vehicle (EV) assembly plant, the company’s first, to produce up to 240,000 vehicles a year at full capacity in 2028 at the company’s site in Alliston, about 60 km north of Toronto.

It’s also planning a battery manufacturing plant, a cathode active material and precursor processing plant in a joint venture with South Korea’s POSCO Future M Co., and a separator plant in a partnership with Asahi Kasei of Tokyo, where Honda is headquartered.

“We were able to use the investment tax credits that we’ve put in place over the past years to make sure that this investment made sense,” Trudeau said in Alliston. “They’re coming here because yes, we have the critical minerals and the natural resources and the clean electricity grid that is so important for much advanced manufacturing.”

The pledge brings to $46 billion in investments in Canada by vehicle and battery producers over the past four years, according to Ottawa. The majority of it is in Ontario where the largest other traditional automakers – General Motors, Ford Motor, Toyota and Stellantis – have plants and close ties by road and trade with their Detroit headquarters in the United States. It’s another boost to the province’s goal of mining battery minerals in the north for plants in the south around Lake Ontario’s Golden Horseshoe.

Tax incentives

Honda may benefit from $5 billion in government tax breaks. Ottawa can offer about $2.5 billion through the proposed electric vehicle supply chain and clean technology manufacturing investment tax credits. Ontario may provide up to $2.5 billion through direct and indirect incentives, according to the government.

The assembly and battery manufacturing plants are expected to create more than 1,000 jobs, and the processing and separator plants would create thousands more direct and indirect jobs, the company said. Ontario Premier Doug Ford said each new job would in fact add seven to the economy because of their impact.

“This is generational investments that their families, their kids may be working here, and we’ve seen this grow as one of the number one industries and sectors right here in Ontario,” Ford said in Alliston, where the new plants are to be built.  “The mayor said it best: ‘Honda is a class act.’ They’re a key pillar in the community.”

The existing Honda operation at Alliston includes two auto plants and one engine factory. They can produce more than 400,000 vehicles and 190,000 engines a year. The company employs more than 4,200 workers in Alliston and has a network of more than 280 dealerships across the country. Ottawa and Queen’s Park had each given Honda $131.6 million to help it retool its manufacturing operations in Alliston for hybrid EVs.

Zero emission

Canada is targeting all vehicles sold by 2035 will be zero-emission. The country’s automotive sector is one of its largest export industries. It builds more than 1.5 million vehicles a year and supports nearly 550,000 direct and indirect jobs.

Recent EV supply chain investments in Canada include $7 billion for a new battery manufacturing facility by Northvolt Batteries North America in Saint-Basile-le-Grand and McMasterville, Que.; $7 billion for Volkswagen’s first overseas EV battery manufacturing plant, in St. Thomas, Ont.; and more than $5 billion from Stellantis and LG Energy Solution to make EV batteries in Windsor, Ont.

Others are $1.8 billion for Ford’s repurposed battery-EV production plant in Oakville, Ont.; $1.5 billion for Umicore to make battery components in Loyalist Township, Ont.; $1.2 billion for a new battery materials plant by Ford, South Korea’s EcoProBM and SK On in Bécancour, Que.; and $600 million for a GM and POSCO Future M Co cathode facility in Bécancour.