Japanese legacy automaker Honda Motor looks to invest nearly ¥2 trillion ($13.83 billion) in a new electric vehicle factory in Canada. According to Japanese publication Nikkei Asia, the project could also potentially include a battery production facility to support Honda’s shift to electric mobility.
Report highlights
Honda is reportedly planning to develop a Canadian electric vehicle factory with the potential to reach a total investment of ¥2 trillion ($13.83 billion).
This enormous amount will apparently make the new project the company’s biggest investment in EV production. Interestingly, the report also noted that the project could also include in-house EV battery production.
These efforts are crucial for Honda to compete and level with its US and Europe-based competitors in the EV industry.
That said, the Japanese automaker is currently evaluating several candidates for the project site. According to the report, one of the current strong candidates is the site next to an existing vehicle factory in Ontario.
Honda plans to finalize the investment by the end of the year. Meanwhile, official factory operation will commence as early as 2008.
Plans in North America
Honda previously announced plans to invest in electric vehicle production and sales in the North American market by 2026, which will ride on its new Honda e:Architecture, as per Reuters. The Japanese automaker expects this project to ensue in the state of Ohio, making the reported Canadian factory its potential second factory in North America.
It is also worth noting that the Canadian government stated last month that it will officially prohibit new gas and diesel-powered vehicle sales in 2035.
Moreover, Canada is abundant in renewable energy sources, significantly reducing its carbon footprint per unit of electricity generation. As per the report, this fact primarily attracted Honda to consider a new factory in the country.
However, Industry Minister Francois-Philippe Champagne omitted to verify the report by only emphasizing Canada’s strong stance in the electric vehicle industry.
“Reports about Honda looking to make a significant investment in Canada speaks to the quality of workforce and the strength of our industry.
It is a testament to Canada’s growing reputation as a green supplier of choice and global EV leader. We will continue to work tirelessly to position Canada’s auto sector for the 21st century economy.”
Industry Minister Francois-Philippe Champagne (via Global News)
Battery JV with LGES
Honda is already set to mass-produce EV batteries in Ohio in 2025 through its strategic partnership with South Korean giant LGES.
They initially announced the partnership in 2022 with a planned investment of $4.4 billion for the new battery joint venture. The partners expected this project to generate 2,200 jobs in the area. It can hit an annual production output of 40 GWh of pouch-type li-ion batteries by the end of 2025.
Honda’s potential new battery factory in Canada will significantly aid in its efforts to catch up with its American and European rivals. As of now, North America contributes about 40% of Honda’s global vehicle sales. The local production strategy can help the Japanese automaker access US federal tax credits of up to $7,500.
By 2030, Honda aims to have its EVs account for at least 40% of its sales in North America. The rate will increase to 80% in 2035, making the proposed Canadian factory a key production hub.
