Ottawa, Honda to Hold Talks on Potential EV Factory in Canada

Honda to Hold Talks

Ottawa, Honda to Hold Talks, this week, federal officials will meet with Honda representatives to discuss the possibility of the Japanese automaker building an electric vehicle factory in Canada. This is part of Ottawa’s multibillion-dollar effort to transform the domestic auto industry in preparation for a transition away from fossil fuels.

Ottawa, Honda to Hold Talks on Potential EV Factory

Honda to Hold TalksThe conference has not been publicly announced, but a senior government official confirmed to The Globe and Mail on Monday that it will take place this week and will include representatives from many federal agencies. The individual stated that federal representatives had already met with Honda’s Canadian and international personnel in December.

The official was not authorized to comment publicly on the discussions, so the Globe does not identify them.

The possible $18.5 billion electric vehicle plant may also create vehicle batteries, according to a story published on Sunday by the Japanese news outlet Nikkei.

If the reported amount of Honda’s investment is accurate, it will be the largest automaker contribution to Canadian electric vehicle production to date.

It will surpass the approximately $7 billion Volkswagen Group battery factory that is set to be built in St. Thomas, Ontario, and the approximately $5 billion battery plant that Stellantis NV STLA-N +1.34%increase and LG Energy Solution are building in Windsor, Ontario.

The company’s attempt to catch up and service the expanding market for completely electric automobiles would be based on the Honda facility. Its prior approach centered on hybrid electric vehicles, around which it is currently retooling its Alliston, Ontario, assembly factory.

It could be the next test of Canada’s willingness to match large subsidies offered by the United States, as Ottawa strives to develop a local electric-vehicle supply chain ahead of an expected global shift away from gas-powered cars and trucks. Although the federal and Ontario governments have pledged up to $15 billion in production subsidies for the Stellantis-LG factory and up to $13.2 billion for the Volkswagen project, Ottawa has yet to commit to extending such agreements to other manufacturers.

The federal lobbying record shows that Honda has been meeting with federal authorities regularly in recent months. However, the registration does not state explicitly what topics were discussed.

The registration records a meeting with Natural Resources Canada officials on November 27, one with a senior Innovation Department official on November 15, and another with a senior Transport Canada official on November 2.

The month previously, Honda met with policy advisers in the office of Chrystia Freeland, Deputy Prime Minister and Finance Minister. The company’s representatives also met with Jamie Kippen, the chief of staff to Environment Minister Steven Guilbeault.

Francesco Sorbara, an MP who chairs the Liberal auto caucus and represents the Ontario riding of Vaughan-Woodbridge, which is immediately south of the existing Honda facility in Alliston, believes that the manufacturer would benefit from constructing a Canadian electric vehicle plant.

“It’s only natural, with Honda being in Canada for 50 years,” he went on to say. “With its operations in Alliston, our workforce, the trade agreements bolstering our case and this transition to a clean energy supply, Canada and Ontario are uniquely positioned for Honda.”

According to Nikkei, Honda is considering various potential sites, including one near its existing factory in Alliston. The manufacturer plans to decide by the end of 2024, with the new site opening as early as 2028, according to the Japanese outlet.

Vanessa De Matteis, a spokesperson for Ontario’s Economic Development Minister Vic Fedeli, declined to confirm any information about the possible electric-vehicle plant but said the ministry is still looking for worldwide investors.

Honda Canada spokesperson John Bordignon stated over the weekend that the carmaker “is considering several initiatives as we move into the electrified era.” He stated that Honda is now focusing on what he refers to as the automaker’s “EV Hub,” which will begin producing electric vehicles and batteries in late 2025.

Honda’s Ohio investment was disclosed at around US$4.4 billion, implying that the project under discussion in Ontario may be much larger.

While Honda appears to be contemplating new facilities in Canada to manufacture both vehicles and batteries, it is unclear whether the latter will be done in collaboration with another company. In Ohio, the business has teamed with LG, a South Korean battery manufacturer. LG is also working with Stellantis to build the Windsor facility.

It’s still unclear what kind of subsidy Honda would request. Automakers have previously asked that Canadian governments duplicate a battery production tax credit available in the United States.

Canada has done so for the Volkswagen and Stellantis-LG facilities, as well as the Swedish battery manufacturer Northvolt AB’s planned factory in Quebec. However, US funds for new or retooled car assembly factories, with which Canada may compete in this situation, are less predictable.

Brendan Sweeney, managing director of the Trillium Network for Advanced Manufacturing, stated that the intricacy of the investments Honda appears to be pursuing in Ontario may make them difficult for governments to support.

“The question is about how to best structure an incentive package for an investment that includes batteries, a new assembly plant and all the requisite machinery, and potential upgrades to existing facilities,” he said. “The ability to take on such a complex investment would represent a monumental achievement.”

Honda is not the only firm testing Canada’s readiness to continue offering billions of dollars in public funds to support electric vehicle investments. Toyota Canada, another Japanese automaker that was relatively late to the electric switch, has been seeking government assistance in retooling its current operations.

In addition to keeping up with the United States, Ottawa is under pressure to encourage such investments to demonstrate that new legislation mandating that a growing share of vehicles sold in Canada be electric will be beneficial to the domestic industry.

In December, the government released the most recent version of its proposal to phase out new gasoline and diesel passenger vehicles by 2035.

 

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