Honda is reportedly considering a major multibillion-dollar investment in electric vehicle production in Canada over the next decade. Sources say the Japanese automaker is weighing a CAD 14 billion ($10.5 billion) spending package as part of a wider North American electrification strategy aimed at ramping up Honda’s shift towards fully electric models.
The potential influx of funding would mark one of the largest injections of capital ever seen in Canada’s auto sector. It signals heightened confidence in Canada’s EV manufacturing future amid intensifying competition south of the border driven by Canada’s EV tax credits and U.S. subsidies that favor American-built vehicles.
$14B Would Fund Multiple New EV Plants
Honda’s CAD 14 billion potential outlay over 10 years would finance the construction of multiple all-new assembly plants dedicated to rolling out EVs, according to insiders. The number of facilities and their exact locales remain unclear, but Ontario and Quebec – longtime auto production powerhouses – are said to top candidate lists.
Facility footprints could range anywhere from Honda’s existing 300-acre Alliston, Ontario site to the nearly 5,000-acre plot housing Toyota’s behemoth Ontario plants. Each new factory could employ thousands of workers, with one source hinting up to 4,500 per plant.
The hefty price tag also reflects substantial retooling investments required to convert combustion-engine production infrastructure over to fully electric. It highlights the vast capital costs incumbent automakers face in their self-professed “revolutionary” transitions toward carbon neutrality over the next decade.
EV Tax Incentives a Key Draw
One major attraction underpinning Honda’s eye of Canada is the nation’s generosity when it comes to EV buyer incentives and production credits compared to restrictions south of the border.
The Inflation Reduction Act signed by President Biden last August imposes stipulations requiring EVs to contain North American-sourced battery metals and undergo final assembly in the U.S. to qualify for tax breaks up to $7,500 per vehicle. The provisions put foreign automakers like Honda at a disadvantage compared to Detroit’s Big Three.
Conversely, Canada’s electric vehicle subsidy provides up to $5,000 for any qualifying EV purchase regardless of origin. Additionally, Ontario offers production rebates of up to nearly $500 million annually for auto manufacturers churning out EVs within the province. Coupled with lower corporate taxes, affordable electricity, and a skilled workforce, Canada carries compelling advantages over rival U.S. states also competing for Honda’s favor.
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Seeking North American EV Dominance
Honda’s apparent lean toward committing billions in Canadian EV investment echoes moves by other major automakers. Toyota announced a $1.8 billion battery plant in North Carolina last fall. General Motors and Stellantis plan to pour $7 billion each into Michigan EV projects this decade.
Yet Honda’s potential Canadian EV injection would tower over recent announcements as among the largest-ever foreign automotive investments in the country. It represents Honda leadership’s drive to cement an EV beachhead and boost North American capacity to export next-gen electric models globally. With Honda lining up its EV assembler places early, it aims to electrify and dominate auto markets worldwide for years to come.
