Honda has decided to indefinitely suspend its $15 billion (US$11 billion) electric vehicle and battery complex in Ontario, following the potential postponement of the expansion project that was first reported last week in Japanese media. The move represents a setback for Canada’s ambitions to build a domestic supply chain for electric vehicles as demand declines and the trade war with the United States continues.
In a statement Thursday, the automaker said the suspension would not affect jobs or production in Alliston, Ontario. plants. This announcement puts an end to the expansion, following Honda’s decision in May last year to postpone the project by two years until 2030.
“Based on our revised strategic objectives, we have determined that an indefinite suspension of the value chain project is appropriate at this stage,” Honda said in its statement on Thursday. “We will continue to review our future procurement and business strategies, while carefully monitoring market conditions.”
The project was intended to expand the company’s Alliston operations through a modernized assembly plant, an independent battery facility and two component manufacturers. The site is designed to produce up to 240,000 vehicles annually by the end of the decade while maintaining approximately 4,200 jobs and adding about 1,000 more.
The expansion was supposed to receive pledged funding of up to $5 billion from the federal and Ontario governments Announced in 2024The company said that Honda has not yet received it.
EV headwinds
The decision to suspend the expansion comes as Honda reported its first-ever full-year loss on Thursday of 423.9 billion yen ($3.6 billion) for the period covering April 1, 2025 to March 31, 2026.
Honda’s auto segment saw declines due to the impact of U.S. tariff policies on its gasoline and hybrid vehicle businesses and the decline in competitiveness of Honda’s products in Asia from the shift of resources toward developing electric vehicles, Honda said in a quarterly statement in March.
Speaking to reporters on Thursday, Prime Minister Mark Carney called Honda’s decision to suspend the facility “disappointing” and said it reflected the company’s broader strategic and financial position, which was further impacted by the rise in gasoline prices, Global News reported.
Electric vehicle production in general has faced various challenges, as automakers have eased spending plans amid rising costs, mixed political signals, especially from the US Trump administration, and weaker-than-expected sales growth.
This year, the Ontario government also shifted its strategy away from electric vehicles To embrace defensive minerals After suffering delays following a series of large, high-profile investment promises.
LG Energy Solution briefly halted and restructured its $5 billion NextStar plant in Windsor in 2023 when Stellantis pulled out while Volkswagen’s $7 billion PowerCo plant in St. Thomas was progressing more slowly than initially envisioned.
Ford chose to produce pickup trucks in Oakville, Ontario, rather than electric vehicles while General Motors stopped manufacturing the BrightDrop electric delivery truck last year in the province.
Ontario has been supporting the passage of battery metals directly to electric vehicle factories. However, it still supports important EV projects, such as Canada Nickel’s (TSXV: CNC; US-OTC: CNIKF) Crawford and Frontier Lithium’s (TSXV: FL; US-OTC: LITOF) PAK fast-track project, as well as several processing plants, including cobalt.
Trade issues
The trade battle between Washington and Ottawa could be an obstacle to plant expansion because Honda Motor Company’s main market is the much larger United States compared to Canada. The two countries have begun reviewing the FTA (along with Mexico), CUSMA, and how to exempt cars.
Separately, the Trump administration Tariff adjustments on April 6 The number of products subject to a 50% rate on basic metals such as steel, aluminum and copper and 25% on most of their derivatives expanded.
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