By Maki Shiraki
TOKYO (Reuters) – Honda Motor plans to build an EV production base in Ontario, it said on Thursday, a C$15 billion ($11 billion) investment that will mark the Japanese automaker’s largest ever in Canada.
The investment, due to be officially unveiled by company executives and Canadian Prime Minister Justin Trudeau on Thursday, signals Honda’s expectation for more growth in demand for EVs in North America.
Organizations
Like other Japanese car companies, Honda has been a relative latecomer to EVs, and is now on a push to better compete with fast-moving Chinese rivals.
In Canada, it intends to produce essential EV components through joint ventures with companies such as Asahi Kasei, setting up a production system that covers everything from materials to finished vehicles.
Operations are targeted to start by 2028, with annual production capacity estimated to be a maximum of 240,000 EVs and 36 gigawatt-hours for batteries.
Although EV demand has slowed globally, Honda executive Shinji Aoyama told reporters the EV supply network would help Honda achieve its goal for all of its North American sales to be either EVs or fuel cell vehicles by 2040.
Honda said it expects to contribute 60%-70% of the total investment, with the rest coming from joint venture partners and Ontario government subsidies.
The EV and battery plants will be constructed adjacent to existing four-wheeled vehicle and engine plants and the total workforce will increase by around 1,000 people from 4,200 now, Honda said.
It also announced a plan to work with South Korean steel giant POSCO for the production of battery cathode materials, and with Asahi Kasei for the production of separators.
By handling everything from material development to vehicle assembly in Ontario – including bringing battery production in house and sourcing locally – Honda expects to reduce costs by more than 20% from current methods.
Details of the investment are due to be finalised by autumn and the Canadian and Ontario governments are expected to lend support through tax breaks and subsidies.
North America accounts for approximately 30% of Honda’s global four-wheeled vehicle sales.
Honda is currently overhauling facilities at its U.S. plant in Ohio, with an investment of $700 million, and constructing a battery plant in a joint venture with LG Energy Solution for $4.4 billion.
($1 = 1.3676 Canadian dollars)
(Reporting by Maki Shiraki; Editing by David Dolan and Mark Potter)
