A major international auto maker is postponing its plans to plough billions into an electric vehicle overhaul of its operations in Ontario, including a new battery plant, citing dipping demand.
Honda Canada confirmed in a statement on Tuesday that it was pausing its Ontario plans by two years — stopping work on the battery plant, retooling its vehicle assembly facility and two battery part facilities.
“Due to the recent slowdown of the EV market, Honda Motor has announced an approximate two-year postponement of the comprehensive value chain investment project in Canada,” Honda said in a statement.
“The company will continue to evaluate the timing and project progression as market conditions change.”
Honda said the decision would not impact its existing Honda manufacturing facility in Alliston, Ont.
Between the battery plant and its parts facilities, along with the electric vehicle facility retooling, the Honda project had been expected to create 1,000 jobs on top of retaining the existing 4,200 jobs at the assembly plant.
Under the original plan, the plant was set to produce up to 240,000 vehicles per year when fully operational in 2028.
News of Honda’s postponement comes barely a year after the project was first announced, in April 2024.
It was one of a series of electric vehicle-related jobs announced by then-prime minister Justin Trudeau and Ontario Premier Doug Ford. The projects were supported through tax credits and direct support from both levels of government.
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Ottawa was set to give the Japanese automaker around $2.5 billion through tax credits, while Ontario committed to providing up to $2.5 billion in support directly and indirectly.
Ford and his ministers were quick to defend the decision they made to support Honda last year, promising to hold the car maker “accountable.”
“When I’ve talked to Honda, they’ve promised us they’re going to continue on with their expansion, they’re going to keep that facility moving forward,” he said at an unrelated event on Tuesday.
Ontario's auto industry struggles
Honda’s pause is the latest in a string of bad news announcements for Ontario’s auto industry.
In Windsor, Ont., Stellantis has instituted pauses at its assembly facility to adjust to demand and a GM Canada plant in Ingersoll, Ont., announced layoffs. GM in Oshawa cut its third shift at the beginning of the month.
Other auto plants in Ontario — like Ford in Oakville and Stellantis in Brampton — are currently closed for long-term retooling projects.
The massive slowdown comes as the effects of U.S. President Donald Trump’s 25 per cent tariff on foreign-made vehicles hit the Ontario economy. Trump has said the goal of those tariffs is to force automakers to move production to the United States.
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At the same time, demand for electric vehicles has reportedly been falling for manufacturers.
In reporting its latest financial results Tuesday, Honda Motor Co. said its profit for the financial year through March fell 24.5 per cent from the previous year and warned that U.S. President Donald Trump’s tariffs will worsen its earnings.
The Tokyo-based automaker said its annual profit totalled 835.8 billion yen (US$5.6 billion), down from 1.1 trillion yen in the previous year. Annual sales edged up 6.2 per cent to nearly 21.69 trillion yen (US$147 billion).
Honda executive vice-president Noriya Kaihara acknowledged that Trump’s tariffs would likely hurt, erasing 650 billion yen (US$4.4 billion) from its operating profit for the fiscal year through March 2026. That’s mainly because of U.S. tariffs on vehicles from Canada and Mexico. Honda’s vehicle shipments from Japan to the U.S. are negligible.
Just last year, the Ford and Trudeau governments were ploughing billions of dollars into the electric vehicle industry, with a promise to turn southern Ontario into a global EV hub.
The federal Parliamentary Budget Officer calculated Ontario had committed $6.8 billion in construction support across all EV supply chain projects. It has promised $14.3 billion to match U.S. production subsidies.
Ford said on Tuesday he would watch carefully to ensure that money led to jobs.
“We’re going to hold them accountable, each auto manufacturer, anything that we’ve given them, we’re going to make sure that they’re held accountable and they continue manufacturing automobiles here in Ontario.”
Opponents at Queen’s Park, however, questioned how the funds were handed out in the first place — and why the government didn’t have more direct control over decisions like a production pause.
“Tax credits (have gone) to big companies like Honda — those are Ontarians’ hardworking taxpayer dollars,” Ontario NDP Leader Marit Stiles said. “As we said repeatedly to this government, there needs to be strings attached.”
Ontario Liberal Leader Bonnie Crombie said she felt the government had put too much faith in the electric vehicle industry — but wouldn’t say if investing in the sector itself was a mistake.
“I think putting all your focus on one sector, one industry, is a bad bet,” she said.
David Piccini, the government’s labour minister, did not say if the government had internal projections for the number of jobs that could be lost as a result of auto tariffs.
— With files from The Associated Press and The Canadian Press
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