Located next to its Alliston plant, this new facility will create 1,000 jobs and boost electric vehicle production
Honda Canada is poised to establish an electric vehicle battery plant adjacent to its Alliston, Ontario assembly facility, which is currently being modified to manufacture fully electric vehicles.
This development is part of a $15bn initiative that is anticipated to include up to $5bn in public funding, according to the Financial Post.
The project is expected to create 1,000 new jobs while retaining the existing 4,200 positions at the Alliston assembly plant.
Notably, the agreement with Honda does not involve production subsidies, which contrasts with deals made with other automakers in Ontario that included incentives to counteract the United States' benefits under the Inflation Reduction Act.
The federal government is set to provide approximately $2.5bn to the Japanese automaker through tax credits aimed at clean technology manufacturing and investments in the electric vehicle supply chain.
Additionally, Ontario has pledged up to $2.5bn in support, covering both direct costs like capital expenditures and indirect expenses such as site servicing.
The extensive $15bn project encompasses not only the retooled assembly plant and the new battery manufacturing facility but also includes the construction of two key battery component facilities—cathode and separator production—in different locations in Ontario.
This makes Honda’s facility the third of its kind in Ontario, following Volkswagen’s in St. Thomas and the Stellantis LG plant in Windsor.
These developments follow lengthy discussions between Honda executives and the Ontario government, initiated by a significant government announcement at Honda’s Alliston facility in March 2022.
During this event, attended by Prime Minister Justin Trudeau and Premier Doug Ford, Honda announced its plans for hybrid production with a combined $131.6m support from federal and provincial levels.
The discussions further evolved into negotiations for a larger electric vehicle investment starting in the summer following the announcement.
Concurrently, Stellantis and LG briefly halted their construction on a $5bn battery facility in May 2023.
They urged the Canadian government to offer incentives comparable to those available in the US under the new Inflation Reduction Act. Eventually, they secured a deal that included performance incentives valued at up to $15bn over roughly ten years.
Deputy Prime Minister Chrystia Freeland remarked that substantial production incentives were crucial for attracting companies like Volkswagen and Stellantis, essential for fostering Canada’s green economy and preventing relocation to the US.
However, the federal government has since indicated a shift away from these high-cost incentives, with remarks from officials noting the industry's realization of the need to establish operations in locations optimal for talent, clean energy, and critical minerals availability.
The establishment of these battery plants is also seen as a catalyst for attracting other parts of the supply chain to the region, as noted by government officials.
This strategy aims to develop a comprehensive battery production ecosystem in Ontario, enhancing the province's position in the North American electric vehicle industry.
