As widely expected, Japanese automaker Honda Motor announced Thursday that it plans to build a production base for electric vehicles in Ontario. At $15 billion (US$11 billion), it is Honda’s biggest investment in Canada.
News of the deal has sparked analysis and commentary in Canadian politics, business and beyond about what it means for the future of EVs in North America, especially when Chinese EV makers are on the rise.
News
Organizations
Read the story by Reuters reporter Maki Shiraki in Tokyo via Kathari News.
For an Ontario-focused report, read the news story by Allison Jones of The Canadian Press, who notes: “The deal does not involve production subsidies, which were used to woo two other automakers to build battery plants in Ontario instead of the United States with its incentives under the Inflation Reduction Act. But the federal government is expected to give the Japanese automaker around $2.5 billion through tax credits for clean technology manufacturing and electric vehicle supply chain investments.”
Read the news release from Honda.
Read the news release from the Ontario government.
Read the news release from Canada’s federal government through the Prime Minister’s Office.
Watch the announcement on the Premier of Ontario YouTube channel.
Commentary and Analysis
Denise Paglinawan at the Financial Post looks at how the Honda deal compares to other electric-vehicle investments in Canada, including deals with Stellantis and Volkswagen.
Canadian Auto Dealer magazine wrote about the positive reactions from the automotive industry.
Brian Kingston, President & CEO of the Canadian Vehicle Manufacturers’ Association, said the news is significant because Canada has now secured more than $40 billion in job-creating auto investment, the majority of which is dedicated to EV assembly and the battery supply chain.
“This underlines Canada’s increasingly important role in the once-in-a-generation transformation underway in the auto industry to electrification,” said Kingston.
“Auto industry reacts to Honda’s $15B EV investment,” Perry Lefko & Todd Philips, Canadian Auto Dealer, April 25, 2024.
In his “Motor Mouth” column for Driving, David Booth offers his congratulations on securing a deal to create “the full electric-vehicle-assembly eco-structure” that Canada’s Industry Minister François-Philippe Champagne has been championing for so long, despite the columnist’s initial skepticism.
He then take a closer look at the risks, the political calculations and the money involved and offers his analysis on why Honda would agree to this deal despite it not including the production subsidies that played a big role in convincing Stellantis and Volkswagen to build their battery plants in Canada — and away from what was available through the U.S. Inflation Reduction Act.
Timing, as they say, is everything, and the difference between the two subvention streams is that the plant-building monies are payable in the here-and-now, while the IRA-matching subsidies are payouts some time in the future.
“Motor Mouth: The dollars and sense behind Honda’s $15-billion investment in Alliston’s EV plant,” David Booth, Driving, April 26, 2024.
On Wednesday, CBC reporter Janyce McGregor published an analysis that served as a reality check to some of the enthusiasm.
Enjoying the hype this announcement is generating means ignoring, for the time being, the fact that most of Northern Ontario’s critical minerals are years (if not decades) away from powering all the new EVs Canadians will be federally mandated to purchase after 2035 to meet federal carbon emissions targets.
It means overlooking the fact that Ford’s government remains well short of the Indigenous partnerships and permissions it will need to fulfil its Ring of Fire mining aspirations. It means dismissing the failure to date of early consumer incentives and spiking spring gas prices to set off a rush of EV sales, and the fact that many of the new EVs on Ontario’s roads were imported from a Tesla gigafactory in Shanghai.
“Table set for Honda’s massive bet on Canada’s electric vehicle sector,” Janyce McGregor, CBC News, April 24, 2024.
Ian Ross, an editor and reporter at Northern Ontario Business, digs a little deeper on that angle and what it means for that region of the province.
While Queen’s Park and Ottawa are spending billions in southern Ontario, comparatively little has been announced in upstream investment in Northern Ontario to support the mines and mid-level processing facilities that will feed this ecosystem.
“Northern Ontario remains idled in electric vehicle revolution,” Ian Ross, SooToday.com, April 26, 2024.
At National Newswatch, Erik Henningsmoen, a research and policy analyst at the Information and Communications Technology Council (ICTC) and co-author of the recent report, “Fast-Charging Ontario’s Electric Vehicle Workforce,” wrote on Wednesday that the news “surfaces a critical issue: a skills gap in Ontario’s workforce could hinder progress unless promptly addressed.”
Joanna Kyriazis, director of public policy at Clean Energy Canada, championed the announcement as an important example of how the federal and provincial governments need to work together.
In the National Post, Jake Fuss and Tegan Hill of the Fraser Institute wrote an opinion piece that framed the deal as an example of “corporate welfare,” with the federal and Ontario governments “picking winners and losers.”
If Honda, Volkswagen and Stellantis are unwilling to build their EV battery plants in Ontario without corporate welfare, that sends a strong signal that those projects make little economic sense.
“Opinion: Taxpayers are the big loser in Honda plant deal.” Jake Fuss & Tegan Hill, National Post, April 26, 2024.
Ashley Nunes, a senior research associate at Harvard Law School, writes in an opinion piece in the Globe and Mail that enthusiasm in Canada for electric vehicles is “tepid at best”:
“Forcing consumers to buy EVs won’t be a popular move. Luckily, and as the Prime Minister likes to remind us, his job is, “not to be popular.”
The government’s EV mandate is unlikely to last in its current form – and without forcing EVs on the population, there is no way uptake will be large enough to justify all the billions Ottawa has been throwing at the automakers.”
“Honda deal is good publicity for Liberals, but who will buy all those EVs?” Ashley Nunes, Globe and Mail, April 25, 2024.
We’ll keep adding to this roundup as more comes out. See a piece you think belongs on this list? Suggest it to perspectives@kathari.news.
