Honda may build $18.4 billion electric car plant in Canada

Honda is contemplating an electric vehicle (EV) and battery plant near Alliston, Ontario, where they already operate another plant. With a decision expected for later this year, the Trudeau Liberals did not confirm if they would provide a taxpayer handout.

Honda may build $18.4 billion electric car plant in Canada
Colin Temple - stock.adobe.com and The Canadian Press / Adrian Wyld
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Another vehicle manufacturer may enter the fray amid Canada’s mad dash to build up its fleet of electric cars.

Honda Motor Co. Ltd., a Japanese auto manufacturer, may invest upwards of $18.4 billion in Canada to catch up in the electric vehicle (EV) market. 

According to Nikkei Asia, Honda is contemplating a vehicle and battery plant near Alliston, Ontario, where they already operate another plant. A decision on the potential investment is expected later this year, reported CTV News.

A spokesperson for Industry Minister Francois-Philippe Champagne did not confirm if the federal government had engaged in talks with the company or if they would provide a taxpayer handout.

Canada’s EV subsidies across all levels of government will cost taxpayers upwards of $50.2 billion, says the Parliamentary Budget Office (PBO). That figure triples the annual production value of its auto sector.

Cabinet earlier estimated costs at $37.7 billion, but federal analysts contend the true costs are closer to $43.6 billion plus $6.6 billion in debt charges, reported Blacklock’s Reporter.

The figure includes a Volkswagen battery factory in St. Thomas, Ontario, two Stellantis battery plants in Windsor and Brampton, Ontario, and a Northvolt factory in Saint-Basile-le-Grand, Québec.

In a written statement Sunday, Champagne said Honda's potential investment is a "testament to Canada's growing reputation as a green supplier of choice and global EV leader."

"Reports about Honda looking to make a significant investment in Canada speaks to the quality of the workforce and the strength of our industry," he added. 

On December 21, 2022, Environment Minister Steven Guilbeault proposed that one-fifth of all passenger vehicles sold in Canada be electric by 2026. 

At the end of 2022, fully electric and plug-in hybrid vehicle sales accounted for 8.4% of new car registrations — up from 5.2% in 2021. 

Annual vehicle sales before COVID constituted less than 2 million units sold, with the total stock in Canada at roughly 23 million. The feds hope to triple that figure by 2030.

Parliament aims to have 60% of all vehicular sales be electric cars at that time, with no new passenger vehicles running on conventional oil and gas by 2035.

However, the number of Canadians considering an electric car has declined from 47% to 34% owing to cost and reliability concerns.

Environment and Climate Change Canada (ECCC) admitted last December 20 that their ban on inexpensive gas vehicles would cost drivers billions of dollars and "disproportionately impact" the working poor, reported Blacklock’s Reporter.

"This will help Canadians with the cost of living," claimed Guilbeault. "Once you drive a car off the lot the savings on fueling and maintenance costs are enormous."

However, the claim is false, according to the report Regulatory Impact Analysis Statement, as the costs incurred by motorists amount to $17.4 billion between 2024 and 2050.

The Budget Office warned taxpayers will wait up to 23 years to recover costs under the most optimistic forecasts. "It is certainly possible that break-even timelines for the production subsidies exceed our estimates," wrote analysts.

"I work for parliamentarians," testified Budget Officer Yves Giroux at the Commons industry committee last October. 

"I work for the benefit of taxpayers and Canadians," he clarified. "I don’t have a vested interest."

Nevertheless, Honda remains eager on the prospects of a new plant in Canada, owing to the abundance of renewable energy in the country.

In cahoots with LG Energy Solution — an automaker already in partnership with Stellantis on the Windsor plant — Honda is retooling a production plant in Ohio to produce electric vehicles. 

In 2022, Honda announced a $1.38 billion upgrade to its Alliston plant to prepare for its CR-V hybrid crossover vehicle — the company’s only electric car for launch this year.

Nikkei Asia says the company may build the prospective Canada plant without industry partners.

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