TORONTO — Honda has postponed a $15-billion electric vehicle project in Ontario citing market demand.
It marks the biggest project delay yet in Canada blamed on the weakened outlook for EV sales, which has been made all the more uncertain because of actions by the Trump administration.
Honda said it is delaying its investment, which includes a battery plant and retooled vehicle assembly line, for about two years. In the meantime, it will keep a close eye on how the market evolves.
"The company will continue to evaluate the timing and project progression as market conditions change," said Honda Canada spokesman Ken Chiu in a statement.
The decision has no impact on current employment at the Honda manufacturing plant in Alliston, Ont., he added.
While EV sales keep growing and taking more market share in Canada — making up almost one in five vehicle sales in the last quarter of 2024, according to S&P Global — the overall demand growth for EVs isn't matching the expectations that led to more than $46 billion in spending commitments in Canada since late 2020.
The added costs and uncertainty of tariffs imposed by U.S. President Donald Trump, as well as his efforts to dismantle funding and support for EV adoption in the U.S., add to the challenges.
In Canada, the phaseout of federal EV subsidies, plus the imposition of 100 per cent tariffs on Chinese EVs that are generally cheaper, are also making it more expensive for shoppers to buy electric vehicles.
The various pressures have seen numerous automakers pull back on EV plans, even before Trump was elected.
In April last year, Ford Motor Co. delayed production of an electric SUV at its Oakville, Ont., plant, opting to produce gas-powered Super Duty trucks there in the meantime.
In July last year, Umicore said it had halted spending on a $2.8-billion battery materials plant in eastern Ontario, citing scaled-back expectations for growth in the electric vehicle market.
The future of Northvolt's battery project in Quebec is also unclear after the parent company declared bankruptcy in Sweden in March.
And just last month, GM temporarily laid off hundreds of workers at its Ingersoll, Ont., plant that produces an electric delivery vehicle because it isn't selling as well as it hoped.
Honda's decision, affecting plans that were expected to create 1,000 jobs when they were announced just over a year ago, came as it reported a drop in profits and more on the way because of tariffs. The company said Trump's tariffs are expected to cut US$4.4 billion from its operating profit for this fiscal year, largely because it has so many vehicles coming from Canada and Mexico into the U.S.
Ontario Premier Doug Ford said Honda assured him it's still committed to the project.
"I've talked to Honda, they've promised us they're going to continue on with their expansion," said Ford at an event in Pickering, Ont.
He said he was confident Prime Minister Mark Carney could reach a trade deal with Trump to create a mutually rewarding relationship that's been growing since the first auto pact some sixty years ago.
"I always say, you can't unscramble an egg that's been around since 1965, you have to make the omelette a lot larger."
The pullback in EV development shows the widening pressures of tariffs, said Flavio Volpe, head of the Automotive Parts Manufacturers' Association.
"The market cooling consequences of U.S. tariff actions continue to be felt by everyone, including Honda," he said on social media.
He said the company's commitment had represented a massive vote of confidence in the Canadian supply base that he hopes it will see through.
"We hope to find a solution for Canada that restores confidence for ambitious projects. All Canadian auto has benefited greatly for 40 years by Honda’s continued commitment," said Volpe.
The project was first announced in April 2024 at an event that included then-prime minister Justin Trudeau and Ontario Premier Doug Ford and was to receive support from the federal and Ontario governments.
Ottawa was set to give the Japanese automaker around $2.5 billion through tax credits, while Ontario committed to provide up to $2.5 billion in support directly and indirectly.
While some EV projects have stumbled, other companies are pushing ahead.
The joint venture between Stellantis and LG is nearing completion on its 4.2 million square-foot battery plant in Windsor, Ont., with work now focusing on equipment installation. The company has been building battery modules since last fall and expects to begin cell production later this year.
And Volkswagen's PowerCo. is still building its big Gigafactory in St. Thomas, Ont., with initial production expected in 2027, though it notes that once complete, the plant will follow a demand-based ramp up in commercial production.
— With files from Allison Jones in Pickering, Ont., and The Associated Press
This report by The Canadian Press was first published May 13, 2025.
Ian Bickis, The Canadian Press
