Honda Motor on Thursday said it and several suppliers will invest $11 billion in battery and electric car manufacturing in Ontario, a significant commitment from a company that has been slow to adopt the technology.
Like Toyota and other Japanese automakers, Honda has emphasized hybrid vehicles, in which gasoline engines are boosted by electric motors, rather than cars powered solely by batteries. The Honda Prologue, a sports car built in Mexico, is the company’s only all-electric vehicle sold in the United States.
But the investment next door to the company’s factory in Alliston, Ont., near Toronto, is a change in direction, raising the possibility that Honda and other Japanese automakers could use their manufacturing expertise to lower the cost of electric vehicles and make them affordable. for more people.
“This is a very big day for the region, for the province and for the country,” Prime Minister Justin Trudeau said at an announcement event in Alliston, where Honda makes the Civic sedan and CR-V SUV. The investment, which will create 1,000 new jobs, is the largest by an automaker in Canadian history, he said.
The company also plans to retool its flagship factory in Marysville, Ohio, near Columbus, to produce electric vehicles in 2026. Together with LG Energy Solution, a Korean company, Honda is investing $4.4 billion in a new battery factory in Jeffersonville , Ohio.
The additional investment in Canada is a sign that Honda expects the technology to become more popular, despite the recent sales slowdown. The Ontario factory will be able to produce up to 240,000 electric vehicles a year when it starts operating in 2028, Honda said. By 2040, Honda plans to have all of its vehicles electric, a firmer commitment than other Japanese automakers.
Toyota, which has faced criticism from environmental groups for its focus on hybrids rather than fully electric vehicles, said Thursday it will expand a factory in Princeton, Indiana, to produce a large electric SUV
The company, the world’s largest automaker, will spend $1.4 billion on the Indiana project and create up to 340 new jobs, the company said. Earlier, Toyota announced that it will start making batteries next year at a $13.9 billion plant in North Carolina.
Canadian leaders are wooing automakers with financial incentives that roughly match the tax breaks the United States is offering car and battery companies under the Inflation Reduction Act, the climate law signed by President Biden. Canada’s federal and provincial governments want the country to become a major player in the electric vehicle supply chain. Canadian-built vehicles can qualify for a $7,500 US federal tax credit, which is only available to North American-built vehicles.
Volkswagen said last year it would invest up to $5 billion to build a battery factory in Thomas, Ontario. Northvolt, a Swedish battery company, last year announced plans for a $5 billion battery factory near Montreal.
Honda will take advantage of up to $1.8 billion in tax credits available to companies that invest in electric vehicle projects, Chrystia Freeland, Canada’s finance minister, said Thursday at the event. Ontario is expected to provide additional financial support.
Canada also has reserves of lithium and other materials needed to make batteries, and generates much of its electricity from nuclear and hydroelectric plants, allowing automakers to advertise that their vehicles are carbon-neutral greenhouse gas emissions.
“As we strive to run our business with zero environmental impact, Canada is very attractive,” Toshihiro Mibe, Honda’s chief executive, said Thursday in Alliston.
Honda will also work with partners to turn raw materials into battery components, he said. By retaining control of the supply chain, a strategy known as vertical integration, companies like Honda hope to lower costs and make electric vehicles more affordable. BYD, a Chinese automaker, has undercut Tesla and other rivals on pricing by controlling mines, raw materials processing and battery production.
However, recent declines in the price of lithium have raised questions about whether Canadian mining of the metal will be competitive with lower costs in Latin America or Australia.
