Honda Signs Deal to Lead North American Electric Vehicle Revolution in Canada

Honda Motor Co Ltd has signed a major deal in Canada to lead the North American electric vehicle (EV) revolution, as Japanese carmakers aim to dominate the market with China excluded. The agreement, worth billions of dollars according to an anonymous source, is set to be announced on Thursday and was initially reported by the Globe and Mail newspaper.

As part of the deal, Honda plans to invest nearly $18 billion to build two EV crossover models in Ontario, Canada by early 2028. The investment includes plants for electric vehicle and battery production, as well as supply chain facilities for manufacturing EV components. The first EV model will be a small electric crossover produced in Alliston, Ontario by late 2027, followed by an Acura model crossover in early 2028.

The investment is expected to create thousands of jobs and cement Honda's presence in Ontario, making it a significant player in the electric vehicle industry in the region. Honda's CEO, Toshihiro Mibe, has put on hold an affordable EV project with GM, indicating a shift in the company's focus towards its own EV development and production efforts in North America.

Why this matters: This move by Honda is part of the broader effort by Japanese automakers to establish a strong presence in the North American EV market, as they seek to capitalize on the growing demand for electric vehicles while excluding Chinese competitors. The deal is expected to have significant implications for the Canadian economy and the future of the automotive industry in the region.

The Canadian federal and provincial governments are offering various incentives, including a new Electric Vehicle Supply Chain tax credit, to attract Honda and other automakers to invest in Canada's EV and battery complex. The details of the deal have not been fully disclosed, but it is expected to involve more than $1 billion in investments across multiple projects in Ontario and Quebec.

Asahi Kasei, a Japanese chemical company, also plans to invest around 200 billion yen ($1.3 billion) to build an EV battery component plant in Canada to supply Honda, according to Nikkei reports.

This move by Honda and other Japanese automakers comes at a time when U.S. protectionism and security fears are limiting the overseas expansion of Chinese car companies like BYD and SAIC Motor in North America, leaving an opportunity for Japanese automakers to dominate the growing electric vehicle market in the region.

Key Takeaways

• Honda to invest $18B to build 2 EV crossovers in Ontario, Canada by 2028.
• Investment to create thousands of jobs and cement Honda's presence in Ontario.
• Japanese automakers aim to dominate North American EV market, excluding Chinese firms.
• Canadian govt offering incentives to attract Honda and other automakers to invest.
• Asahi Kasei to build $1.3B EV battery component plant in Canada to supply Honda.