Honda indefinitely suspends $15B EV plant in Ontario

Honda has indefinitely suspended its plans for a $15-billion electric vehicle complex in Ontario due to changing business conditions.

The Japanese automaker said last May it was pausing development at the plant, with plans to review where the EV market was at in two years.

The decision to more definitively suspend the plant was first reported last week by Japanese media, but at the time Honda did not confirm the news.

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

The company says the pause won’t impact current employment or production levels at its Alliston, Ont., manufacturing plant.

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Honda pauses $15B investment in Canadian EV plants

Japanese automaker Honda says it’s pausing a $15-billion investment plan that would have seen four new electric vehicle factories built in Ontario. Honda says it’s because of slow market growth in the EV sector due to Trump’s trade war.

The planned EV complex could have created about 1,000 manufacturing jobs and made 240,000 vehicles a year once it was fully operational by 2028.

The project was first announced in April 2024 at an event that included then-prime minister Justin Trudeau and Ontario Premier Doug Ford, both of whom pledged money toward the project. Ottawa and Ontario said they would provide $2.5 billion each for the project.

In the Thursday announcement, Honda said it hasn’t received any of that promised government money.

Honda posts $3.68 billion loss

The change comes as Honda posted its first-ever full-year loss at 423.9 billion yen ($3.68 billion Cdn), which it attributed heavily to big plans for EVs not panning out.

“EV demand has declined considerably, due to the rollback of environmental regulations in the U.S. and other factors,” Honda said in a statement.

Honda’s chief executive Toshihiro Mibe said on Thursday that his company would still pursue carbon neutrality, but by allocating more development and production resources to hybrids.

Greg Layson, digital editor for Automotive News Canada, says many of the vehicles made in Canada head to the U.S. to be sold, so it makes sense that the Trump administration’s pullback on EV incentives hit Honda hard.

That’s layered on top of American automotive tariffs, which have also taken a toll on carmakers, Layson said.

“When you’re losing money in one sense and paying money out the door in another … it’s going to make it really difficult to follow through on $15-billion plans.”

Because the indefinite pause doesn’t affect current jobs, Layson said there’s no immediate impact on Ontario. Instead, it means “starting over” on investment promises.

WATCH | Honda’s decision is disappointing, prime minister says:

Honda suspending $15B EV plant in Ontario ‘a disappointing decision,’ Carney says

As Prime Minister Mark Carney expressed his disappointment in Honda’s decision to indefinitely suspend its plans for a $15-billion electric vehicle complex in Ontario over changing business conditions, he said ‘the shift toward lower emission vehicles is certainly progressing globally and likely to progress here.’

During a media conference Thursday, Prime Minister Mark Carney called the announcement “disappointing.” But given spikes in the cost of gasoline worldwide following the oil supply crunch in the Strait of Hormuz, Carney said he didn’t believe the shift toward electrification was over.

“The shift towards lower emission vehicles is certainly progressing globally and likely progressing here, but those are choices of Canadians.”

Brendan Sweeney, president and CEO of Pacific Manufacturing Association of Canada, which represents manufacturers in Canada including Honda, said many of the cars made at Toyota and Honda plants in this country are hybrids and “flying off the shelves.”

Still, he hopes the government can focus on securing a continued free trade deal with the U.S., which he said would help the automakers he represents in a big way.

“These decisions … they’re never made lightly. And it will be a lot easier to make those decisions if we get some clarity on our trade relationship with the United States,” Sweeney said.