SUPERNEWS

Equities

Honda's $11B EV Push in Canada, Targets 100% Electrified Sales by 2040

Honda invests $11 billion in Canadian EV strategy, aiming for 240,000 vehicles annually by 2028 with government support.

By Max Weldon

ᐧ

4/25, 13:08 EDT
article-main-img

Key Takeaway

  • Honda commits $11 billion to its EV strategy in Canada, aiming for 100% electrified sales by 2040 and starting production by 2028.
  • Partnerships with POSCO Future M and Asahi Kasei Corp, alongside up to C$5 billion in government incentives, support Honda's transition.
  • The investment is expected to create approximately 1,000 new jobs at a new battery plant in Alliston, Ontario.

Honda's EV Expansion in Canada

Honda Motor Co. has announced a significant investment of C$15 billion ($11 billion) to develop its electric vehicle (EV) supply chain in Canada, with substantial financial support from the Canadian government. This move is part of Honda's broader strategy to meet the long-term demand for EVs in North America and aligns with its goal to have electrified vehicles constitute 100% of its sales by 2040. The investment will include contributions from joint venture partners and aims to commence EV production by 2028. Honda plans to manufacture 240,000 vehicles annually at a new facility in Alliston, Ontario, where it currently produces gasoline-powered models. Additionally, a standalone battery plant with a capacity of 36 gigawatt hours will be established in the same community.

Strategic Partnerships and Government Support

To bolster its battery supply chain, Honda is initiating discussions with South Korea's POSCO Future M Co. for a cathode materials facility and plans to collaborate with Japan's Asahi Kasei Corp. on separator production. These partnerships are crucial for Honda's transition towards EV manufacturing and reducing its reliance on external battery suppliers. The Canadian government, along with the province of Ontario, is providing Honda with investment tax credits and a package of direct and indirect incentives potentially worth up to C$5 billion. This support underscores Canada's commitment to securing a portion of the North American auto industry's shift towards EVs, as emphasized by Prime Minister Justin Trudeau and Ontario Premier Doug Ford.

Economic Impact and Industry Perspectives

The new battery plant is expected to create approximately 1,000 new jobs, adding to the 4,200 positions at Honda's existing vehicle manufacturing plant in Alliston. Additional jobs are anticipated from the construction of other battery material factories, although specific numbers have yet to be released. Critics, such as McMaster University professor Greig Mordue, argue that Honda's decision to invest in Ontario is driven by its own strategic interests rather than the presence of other large battery plants in the region. Mordue suggests that Honda's investment is part of a global supply chain strategy rather than a Canadian-centric one.

Management Quotes

  • Shinji Aoyoma, Executive Vice-President of Honda:

    "We want to use Canada’s rich resources and energy to be able to establish an EV-focused value chain."