Honda, federal government to meet this week as reports emerge of possible EV plant deal

A Honda Global team will be in Canada this week to meet with senior federal government officials amid reports the Japanese automaker is considering making an $18.4 billion investment to build electric vehicles here, CBC News has learned.

This week's meeting comes after senior executives from Honda Global and Honda Canada met with Industry Minister François-Philippe Champagne and other senior officials last month, according to sources with direct knowledge of the meetings.

News of these meetings comes as the Japanese news outlet Nikkei Asia reports that Honda is looking at investing $18.4 billion to build an electrical vehicle plant in Canada that could also produce batteries.

The Japanese automaker is reportedly looking at a number of possible locations for the plant, including a site adjacent to its existing facility in Alliston, Ont.

The Nikkei report said Honda is expected to make a final decision on the project by the end of the year, and the new facility could begin production as early as 2028.

A spokesperson for Honda wouldn't confirm the Nikkei report but said the company is looking into "a number of initiatives" to achieve the firm's 2040 target of producing nothing but electric vehicles.

"Currently, we are focused on the EV Hub we are establishing in Ohio, where we will begin production of EVs and EV batteries in North America in late 2025," the spokesperson said.

Champagne would not confirm negotiations with Honda are underway but said his government will continue to promote Canada as a global leader in EV production to attract these kinds of investments.

"Reports about Honda looking to make a significant investment in Canada speaks to the quality of [Canada's] workforce and the strength of our industry," he said in a media statement.

Prime Minister Justin Trudeau and Ontario Premier Doug Ford during an announcement on a Volkswagen electric vehicle battery plant at the Elgin County Railway Museum in St. Thomas, Ont., Friday, April 21, 2023. (Tara Walton/The Canadian Press)

A spokesperson for Ontario's Minister of Economic Development Vic Fedeli told CBC News the provincial government "does not discuss economic prospects publicly" but added Premier Doug Ford's government is working to grow its "end-to-end EV supply chain."

Flavio Volpe, president of the Automotive Parts Manufacturers' Association, said Canada's decision to end sales of new passenger vehicles powered only by gasoline or diesel by 2035 has prompted automakers around the world to start talking with provincial and federal governments about how they can make that a reality.

Volpe said he's not surprised by reports of high-level discussions between Ottawa and Honda.

"There is no certainty in any of this but I am particularly excited about the idea that Honda would double down on what they have here," he said.

Government support

Last year, federal and provincial governments announced a number of deals with EV battery producers Northvolt, Volkswagen and Stellantis-LGES.

Governments estimated that investment at $37.7 billion over ten years, with $32.8 billion of that going toward production subsidies and $4.9 billion earmarked to build the facilities.

The Parliamentary Budget Officer said that 62 per cent of the costs will be picked up by the federal government, with provincial governments covering the remaining 38 per cent.

Federal and provincial investments in EV production are a direct effort to keep pace with measures contained in the Inflation Reduction Act, a $369 billion U.S. program that offers subsidies and incentives to American companies building electric cars.

The manufacturing facility to be built in Canada by Northvolt, a Swedish battery giant, will occupy 170 hectares — an area the size of more than 300 football fields — on Montreal's South Shore, in a parcel of land spanning two communities.

In the spring, the federal government announced $13.2 billion in production subsidies over the next 10 years to build a Volkswagen battery plant in St. Thomas, Ont. That plant will be the size of 391 football fields and bring auto jobs to the region.

Stellantis-LGES halted construction on a Windsor, Ont., battery plant this summer, saying the provincial and federal governments would need to come through with more than the initial investment of $500 million.

Construction resumed after the governments announced up to $15 billion in subsidies. That plant is expected to open in 2024 and employ about 2,500 people.

Aside from those three deals, Ottawa and Quebec announced in August that they are investing $644 million to build a new Ford plant in the city of Bécancour to produce the materials needed for EV car batteries.