Japanese automaker Honda is putting $15 billion into their Ontario operations with a new electric vehicle manufacturing plant in Alliston, Ont. with a joint $5 billion coming from the federal and Ontario governments.
Prime Minister Justin Trudeau, Ontario Premier Doug Ford and Honda executives made the announcement at the Alliston plant Thursday morning.
“This is a historic day with the largest auto investment in Canada’s history,” Trudeau said at the start of his remarks Thursday morning.
“With this investment we will be creating Canada’s first electric vehicle supply chain from start to finish.”
The $15 billion project also includes plans to retool the existing Alliston plant to make solely electric vehicles, build a battery plant nearby and two battery part facilities elsewhere in Ontario.
“The world is changing rapidly and we must work toward the allies in carbon neutrality to sustain the global environment. Honda is making steady progress toward our goal to make battery electric and electric vehicles represent 100 per cent of our vehicle sales by 2040,” Honda global CEO Toshihiro Mibe said.
Canada’s target is to have all newly sold consumer vehicles be emission free by 2035.
Mibe added that North America is their largest market and he sees Canada and the United States as central to the company’s future plans. Honda’s goal is to have the electric vehicle facility up and running in 2028, with an annual production target of up to 240,000 vehicles.
The company says this will create 1,000 more jobs, in addition to the 4,200 that already exist at the assembly plant. Trudeau added there will be additional construction jobs associated with the project.
Unlike previous electric vehicle deals inked by Ottawa and Ontario, this one does not include production subsidies.
Instead, the federal government is contributing $2.5 billion through tax credits under the already existing clean technology manufacturing program and proposed electric vehicle supply chain tax credit included in the 2024 budget.
Ontario is contributing $2.5 billion through direct help on capital costs and indirectly through covering the land servicing costs for the future facilities.
The Conservatives say that when public money goes into projects like this, there should be assurances that any jobs created will be filled by Canadians and not temporary foreign workers.
“We can’t trust that his latest announcement of $5 billion in Canadian taxpayer money to another large multinational corporation will be any different. Conservatives will not let Justin Trudeau sell out Canadian union workers and taxpayers yet again,” innovation critic Rick Perkins and trade critic Kyle Seeback said in a joint statement.
“Canadians deserve a government that will stand up for Canadian workers. Common sense Conservatives will ensure Canadians’ tax dollars are used wisely, and that any taxpayer-funded jobs are given Canadians, not foreign replacement workers.”
Stellantis subsidiary NextStar signaled plans to bring in up to 900 temporary workers, predominantly with Korea to assist in the construction of their heavily subsidized battery plant in Windsor, Ont, which received a joint $15 billion from the federal and Ontario governments.
During the Honda press conference, Trudeau said that of the 2,000 construction workers in Windsor only 72 are temporary foreign workers. He added their main job is to train Canadians on how to use specialized equipment.
The prime minister defended public money going into this deal with Honda, saying moves like this are essential to competition in a shifting global vehicle market.
“It’s a legitimate debate, but I think they’re wrong as the world is turning towards new ways of manufacturing and cleaner products, cleaner vehicles, changing the way we build things, changing what we build, countries around the world are competing for investments,” Trudeau said.
“Yes, there are politicians who sit back and say ‘No, no, no, no, no. We’ve got to balance the budget at all costs. Even if it means not investing in Canadian workers and investing in the future.’ Well, I think they’re wrong.”
Ford echoed Trudeau’s defence of moves like this in attracting investments from multi-national automakers like Honda.
“This is generational. This is decades and decades down the road. What price do you put on that? There is no price you can put on that because we’re investing into the people. The money is staying here in Ontario. It’s not going overseas. It’s not going down to the U.S. It’s staying right here in Ontario for decades and generations to come,” Ford said.
Speaking in Montreal, NDP Leader Jagmeet Singh said he supports these kind of investments, but with conditions.
“We support investments, but we want to see iron-clad guarantees where there will be good jobs for Canadians, for Quebecers. We want to see good-paying union jobs and we want to see the investment stay in the country,” Singh said.
With the need for critical minerals like lithium to power these EV batteries, Singh stressed the importance of ensuring mining operations are also environmentally friendly.
“The way we extract those also has to be done in a manner where we are also not contributing to the problem. We can do that, so we need to be very careful about the way we are investing in extraction is done, in a proper manner that is protecting the environment and following all the rules,” Singh said.
“We can do that, and we have to do that because we have to make sure Canada is at the forefront of the future of transportation and more and more investments are being made in electric transportation. We need to be able to do that here in Canada.”
Past EV subsidies
The federal and Ontario governments have already put up a combined $28.2 billion in subsidies to attract battery plants from Volkswagen and Stellantis LG to St. Thomas and Windsor, Ont. respectively. This tactic was used to attract the plants to Canada instead of the United States, which included incentives in the Inflation Reduction Act.
These subsidies are contingent on hitting hiring, construction and production targets, which are expected to be dolled out over the years, ending in 2032.
The federal government is covering two-thirds of these costs, with the Ontario government paying for the remainder.
A report from the Parliamentary Budget Officer (PBO) last September said that it will take Ottawa 20 years to break even on what the government characterized as an investment.
At the time, Innovation Minister Francois-Philippe Champagne said the PBO report did not capture broader economic impacts on the supply chain associated with increased battery production, which he said could increase the economic benefit of the subsidies.
With files from The Canadian Press.
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