Honda Motor Co. announced Thursday that it and several suppliers will invest $11 billion to manufacture batteries and electric vehicles in Ontario. This is a big promise for the company, which has been slow to adopt this technology.
Like Toyota and other Japanese automakers, Honda has focused on hybrid cars, which add an electric motor to a gasoline engine, rather than cars powered solely by batteries. The Honda Prologue, a Mexican-made sport utility vehicle, is the company's only fully electric vehicle sold in the United States.
But the investment adjacent to the company's factory in Alliston, Ont., near Toronto, is a turnaround as Honda and other Japanese automakers leverage their manufacturing expertise to lower the cost of electric vehicles and make more There is a growing possibility that people will be able to purchase products at affordable prices. people.
“Today is a very important day for our region, our province and our country,” Prime Minister Justin Trudeau said at a launch event in Alliston, where Honda makes the Civic sedan and CR-V SUV. He said the new hires are the largest by an automaker in Canadian history.
The company also plans to renovate its main factory in Marysville, Ohio, near Columbus, to begin producing electric vehicles in 2026. Honda is investing $4.4 billion in a new battery factory in Jeffersonville, Ohio, along with South Korean company LG Energy Solutions.
The additional investment in Canada is a sign that Honda expects the technology to spread despite recent sales weakness. Honda says the Ontario plant will be able to produce up to 240,000 electric vehicles a year when it begins operations in 2028. Honda plans to make all of its vehicles electric by 2040, a stronger commitment than any other Japanese automaker.
Toyota, which has faced criticism from environmental groups for its focus on hybrid rather than fully electric vehicles, said Thursday it will expand its Princeton, Indiana, plant to produce large electric SUVs.
The world's largest automaker announced it will invest $1.4 billion in projects in Indiana and create 340 new jobs. Toyota previously announced that it would begin producing batteries next year at its $13.9 billion plant in North Carolina.
Canadian leaders have been wooing automakers with financial incentives roughly equivalent to the tax breaks the U.S. provides to auto and battery companies under President Biden's signature climate law, the Suppressing Inflation Act. Canada's federal and provincial governments want the country to become a major player in the electric vehicle supply chain. Vehicles manufactured in Canada are eligible for a $7,500 U.S. federal tax credit that applies only to vehicles manufactured in North America.
Volkswagen announced last year that it would invest up to $5 billion to build a battery factory in Thomas, Ont. Last year, Swedish battery company Northvolt announced plans to build a $5 billion battery factory near Montreal.
Canadian Finance Minister Chrystia Freeland said at an event Thursday that Honda will benefit from up to $1.8 billion in tax credits available to companies investing in electric vehicle projects. Ontario is expected to provide additional financial support.
Canada also has deposits of lithium and other materials needed to make batteries, and much of its electricity is generated at nuclear and hydroelectric plants, so automakers can reduce the greenhouse gas emissions of their vehicles. It can be advertised as being manufactured with no energy.
“Canada is very attractive to us because we aim to operate with zero environmental impact,” Honda CEO Toshihiro Mibe said Thursday in Ariston.
Honda will also work with partners to convert raw materials into battery parts, he said. Companies like Honda hope to reduce costs and make electric vehicles more affordable by maintaining control of the supply chain, a strategy known as vertical integration. Chinese automaker BYD can undercut Tesla and other rivals on price by controlling mining, raw material processing and battery manufacturing.
However, the recent decline in lithium prices has raised questions about whether lithium mining in Canada will be competitive with lower-cost operations in Latin America and Australia.