Honda halts $15B Ont EV plant amid losses

Honda is indefinitely suspending its planned $15-billion (US$11-billion) electric-vehicle and battery complex in Ontario, following the expansion project’s potential postponement first reported last week in Japanese media. The move marks a setback for Canada’s ambitions to build a domestic EV supply chain as demand cools and the trade war with the U.S. persists.

In a statement Thursday, the automaker said the suspension won’t affect jobs or production at its Alliston, Ont. plant. The announcement puts an end to the expansion, following Honda’s decision in May last year to delay the project by two years to 2030.

“Based on our revised strategic objectives, we have determined that an indefinite suspension of the value chain project is appropriate at this stage,” Honda said in its release on Thursday. “We will continue reviewing our future procurement and business strategies, while carefully monitoring market conditions.”

The project was to expand the company’s Alliston operations with an upgraded assembly plant, a standalone battery facility and two component plants. The site was designed to produce as many as 240,000 vehicles a year by the end of the decade while preserving roughly 4,200 jobs and adding about 1,000 more.

The expansion was supposed to receive pledged funding of up to $5 billion from the federal and Ontario governments as announced in 2024, but Honda has yet to receive it, the company said.

EV headwinds

The decision to suspend the expansion comes as Honda reported its first-ever full year loss on Thursday of 423.9 billion yen ($3.6 billion) for the period covering April 1, 2025 to March 31, 2026.

Honda’s auto sector has experienced declines due to the impact of U.S. tariff policies on the gasoline and hybrid vehicle business and lessened competitiveness of Honda products in Asia from the shift of resources towards EV development, it said in a quarterly statement in March.

Speaking to reporters Thursday, Prime Minister Mark Carney called Honda’s decision to suspend the facility “disappointing” and said it reflects the broader strategic and financial position of the company, which is further affected by spikes in gasoline prices, according to Global News.

The EV buildout in general has faced various challenges, with automakers tempering spending plans amid high costs, uneven policy signals, especially from the U.S. Trump administration, and softer sales growth than forecast.

The Ontario government has also this year shifted its strategy away from EVs to embrace defence metals after being stung with delays following a series of large high-profile investment promises.

LG Energy Solution briefly halted and restructured the $5-billion NextStar plant in Windsor in 2023 when Stellantis pulled out while Volkswagen’s $7-billion PowerCo plant in St. Thomas is progressing more slowly than initially envisioned. 

Ford chose to produce pickup trucks in Oakville, Ont., instead of EVs while General Motors stopped making the BrightDrop electric delivery van last year in the province.

Ontario had been championing a battery metals corridor straight to electric vehicle plants. However, it’s still backing important projects for EVs, such as by fast-tracking Canada Nickel’s (TSXV: CNC; US-OTC: CNIKF) Crawford and Frontier Lithium’s (TSXV: FL; US-OTC: LITOF) PAK, as well as several processing plants, including cobalt. 

Trade issues

The trade battle between Washington and Ottawa can also function as an impediment to the expansion plant because Honda’s main market for cars is the much larger U.S. compared to Canada. The two countries are starting to review their free trade deal (along with Mexico), CUSMA, and how it exempts autos.

Separately, the Trump administration’s April 6 tariff adjustments expanded the number of products subject to 50% on core metals steel, aluminum and copper and 25% on most derivatives.