Honda invests billions in Canada to set up EV production hub

Dive Brief:

Honda Motor Co. and its joint venture partners are investing up to CAD $15 billion ($11 billion) to build out an electric vehicle supply chain in Canada, according to a press release on Thursday.
The investments include a new EV factory and a separate battery plant in Alliston, Ontario. The EV factory is expected to begin production in 2028, with a production capacity of 240,000 EVs per year. The battery plant will have a capacity of 36 gigawatt hours per year.
Honda’s investment in Canada follows a $700 million commitment to establish an EV production hub in Ohio that will share knowledge and expertise with other plants in North America, including the two new plants in Ontario.

Dive Insight:

More than just new factories, Honda is investing in upgrading its EV supply chain infrastructure in Canada.

The automaker’s EV hub in Canada will include all aspects of manufacturing, including the procurement of raw materials for battery production. It will include a cathode active material and precursor processing plant through Honda’s joint venture partnership with Posco Future M Co. and a separator plant through a JV with Asahi Kasei.

Honda is currently evaluating the financial scope of the project, including negotiations with its joint venture partners, which are expected to be finalized in the next six months. To further support the projects, Honda is working with the governments of Canada and Ontario to access performance-based initiatives through new investment tax credits, as well as other local incentives.

Honda originally planned to co-produce affordable EVs with General Motors for the North American market, but the two automakers canceled those plans last fall amid uncertain market conditions. Now, Honda is preparing to mass-produce EVs in North America for the first time, as the company aims for zero emissions vehicles to account for 100% of its sales by 2040.

"Today’s announcement is a historic investment by a manufacturer in the Canadian auto industry,” said Honda Canada CEO Jean Marc Leclerc, in a press release.

Over the years, Honda has invested over CAD $6.5 billion in its Canadian operations, and the automaker sources over CAD $3 billion goods and services each year from its from Canada supply network. Honda’s latest investment for establishing an EV supply chain will be its largest ever in Canada.