Honda's $11B Vision: Catalyzing EV Production in Canadian Hub

Apr 29, 2024 03:54 AM EDT

TUNED HONDA CIVIC CARS — (Photo : PEXELS/WAVYVISUALS )

On Thursday, Honda unveiled its strategy to expand its EV supply chain into Canada, citing the long-term appeal of the Canadian EV manufacturing ecosystem. According to reports, Honda Motor Co is set to invest CA$15 billion ($11 billion) in establishing electric vehicle manufacturing facilities north of Toronto, supported by significant financial backing from Canadian authorities.

$11 Billion Investment, EV Canadian Hub

As reported by Green Car Report, the investment stands at a substantial $11 billion U.S. dollars, with contributions from joint-venture partners. However, it does not explicitly confirm the establishment of an EV assembly plant. Honda has begun to assess the possibility of building a cutting-edge, eco-friendly Honda EV factory in Alliston, Ontario, in addition to a different Honda EV battery plant.

Honda has scheduled the factory's opening for 2028. It is estimated to produce up to 240,000 EVs a year in addition to the 36 gigawatt-hours that the EV battery plant can produce yearly. Honda plans to maintain the current workforce level of 4,200 jobs while adding 1,000 new positions for EV and EV battery-related facilities.

Additionally, the proposal includes plans for a battery materials processing plant in partnership with South Korea's POSCO and a joint-venture battery separator plant with Japanese chemical giant Asahi Kasei. Honda anticipates that these developments will generate "significant spinoff jobs" in the surrounding areas.

The extent to which next-generation batteries will feature in this new plant remains uncertain. While Honda is actively developing its own solid-state EV batteries, viewing them as crucial for enabling more affordable small EVs by 2030, it is yet to be determined how prominently they will be incorporated into this particular venture.

Game Changer Investment

As outlined by Electrek, Canadian Prime Minister Justin Trudeau hailed Honda's investment as a "game changer for manufacturing in Canada." After a whole supply chain is established, Honda expects to see cost savings of more than 20%. Honda aims to have 100% of its vehicle sales come from electric vehicles (EVs) and fuel cell electric vehicles (FCEVs) by 2040.

In addition, Honda has set aside $700 million to retool three plants in Ohio, putting them in a prime location to produce EVs and EV batteries in the future. According to Benzinga, representatives from Honda, Ontario Premier Doug Ford, and Canadian Prime Minister Justin Trudeau are prepared to make the announcement about the investment in Alliston, Ontario.

The report cited Bloomberg claims that extensive negotiations between Honda and the Canadian government led to this decision. Honda's approach is a calculated reaction to the rising demand for electric cars in North America. The business, which is well-known for producing hybrid cars in the country, intends to start producing its first fully electric automobiles in Marysville, Ohio, starting the following year.

According to the report, Honda intends to establish a new battery assembly plant in Alliston, enhancing the existing infrastructure for electric vehicle production. Additionally, investments are allocated for a cathode materials facility and a battery components plant in Ontario, with detailed plans expected to be unveiled subsequently. Federal assistance to Honda encompasses tax credits for clean manufacturing and electric vehicle production, subject to Honda's actual investment in Canada. Ontario will provide subsidies for capital expenses and may support infrastructure enhancements such as road and sewer upgrades.