Automaker cites ‘revised strategic objectives’ – and lack of government funding from Canada
Honda Canada has indefinitely suspended its landmark $15-billion electric vehicle supply chain investment project, citing evolving business conditions, a change in external resource strategy and shifting customer demand.
The project, first announced in April 2024, had been billed as Canada's first comprehensive EV supply chain — a four-plant network spanning EV assembly, battery manufacturing, cathode active material processing and separator production, all located in Ontario.
"Based on our revised strategic objectives, we have determined that an indefinite suspension of the value chain project is appropriate at this stage," Honda Canada said in its statement.
"We will continue reviewing our future procurement and business strategies, while carefully monitoring market conditions."
Honda: no funds transferred
Both the federal and Ontario governments had committed significant financial support for the project. The federal government estimated Honda's eligible investments could benefit from approximately $2.5 billion through its proposed EV Supply Chain investment tax credit and Clean Technology Manufacturing investment tax credit — the sixth major economic investment tax credit introduced by the federal government, complementing the existing 30 per cent Clean Technology Manufacturing investment tax credit. The Government of Ontario committed support of up to $2.5 billion through various direct and indirect incentives.
The two governments had also previously made matching investments of $131.6 million to help Honda Canada retool its Alliston operations for the next generation of hybrid EVs.
However, no funds had been transferred to the automaker, said the May 14 statement from Honda Canada.
“While the investment project received a future funding commitment from both provincial and federal governments, no funds have been transferred to Honda as a result of that commitment.”
'Game-changer' for auto sector
When Prime Minister Justin Trudeau and Ontario Premier Doug Ford welcomed the investment in Alliston in April 2024, it was described as a game-changer for Canadian manufacturing. The $15-billion project represented Honda's largest investment in North America and was held up as proof that Canada could compete globally across the entire EV supply chain — from raw materials to battery manufacturing to assembly.
"Honda's investment is a vote of confidence in Canada, in Canadian auto workers, and in our manufacturing sector,” said Trudeau.
Ford was equally effusive, framing the investment as the realization of a core economic promise.
"Today's historic $15-billion investment by Honda delivers on our government's promise to bring back manufacturing as part of our plan to rebuild Ontario's economy, with thousands of good-paying union jobs and economic benefits for workers and families across the province."
Then-Deputy Prime Minister Chrystia Freeland described it as Honda's largest investment in North America and said it was about securing Canada's EV advantage from end to end.
"We are securing Canada's electric vehicle advantage by building out the entire electric vehicle supply chain ecosystem, from raw materials to battery manufacturing to auto assembly lines — ensuring workers benefit today and for decades to come," she said.
Ambitious plans for Canadian manufacturing
The project was to include an EV assembly plant and a standalone battery manufacturing plant at Honda's existing facilities in Alliston, Ont. — the EV assembly plant would have been the first of its kind for Honda Motor Co., Ltd. globally. To complete the supply chain, Honda had also planned a cathode active material and precursor (CAM/pCAM) processing plant through a joint venture with Korean battery materials company POSCO Future M Co., Ltd., and a separator plant in partnership with Japanese chemical company Asahi Kasei Corporation, with both additional facilities also to be located in Ontario.
Once fully operational in 2028, the new assembly plant was projected to produce up to 240,000 vehicles per year, according to the original announcement. The project had the potential to create more than 1,000 incremental manufacturing jobs in Alliston directly, with thousands of additional direct and indirect jobs projected across Ontario and Canada through the CAM/pCAM and separator facilities — including during the construction phase and across Ontario's auto parts supplier and research and development ecosystems.
Ontario's then-Minister of Economic Development, Job Creation and Trade, Vic Fedeli, called it several years in the making. "Honda's investment will play an integral role in advancing the innovative technologies that will define the future of automotive design, while securing thousands of good-paying jobs for workers in Alliston and across the province," he said.
Minister of Innovation, Science and Industry François-Philippe Champagne pointed to Canada's broader competitive advantages as the draw. "With a highly skilled workforce, clean energy, an abundance of critical minerals, access to markets, and a flourishing electric vehicle ecosystem, Canada has everything that companies like Honda need to grow," he said.
Part of broader Canadian EV push
The Honda announcement had been the centrepiece of what the federal government described as more than $46 billion in EV supply chain investments attracted to Canada since 2020, including a $7-billion Volkswagen EV battery plant in St. Thomas, Ont., over $5 billion from Stellantis and LG Energy Solution for a battery manufacturing joint venture in Windsor, Ont., and a $7-billion Northvolt battery facility in Quebec.
The federal government had set a target of 100 per cent zero-emission vehicle sales by 2035, and projected global EV sales would be more than three times higher in 2030 than in 2023.
For Honda, the project was also tied to its own global carbon neutrality ambitions — the company has set a target of 100 per cent zero-emission EV sales in North America by 2040.
Existing Alliston operations continue
The suspension does not affect current employment or production at Honda's Alliston facility, according to Honda Canada. In 2025, the plant built approximately 400,000 vehicles — around 198,000 Civic units and 202,000 CR-V units. All Civic sedans and CR-V units sold in Canada are built at the Alliston plant, and more than 60 per cent were hybrids in 2025.
Honda has maintained continuous manufacturing operations in Alliston since 1986 — making it the first Japanese automaker to produce cars in Canada — and currently employs over 4,200 people at the facility, with a network of more than 280 dealerships across the country.
"Our unique approach of building vehicles where we sell allows us to confidently navigate evolving market conditions and reinforces Honda's flexible manufacturing approach and long term commitment to building vehicles in Canada to meet the needs of our customers," the company said.
Jean Marc Leclerc, president and CEO of Honda Canada, struck an optimistic tone at the time of the original announcement. "Honda of Canada Manufacturing is one of the premier automotive manufacturing facilities in the world and, for nearly forty years, our work has been guided by determination, innovation, and a relentless drive to evolve," he said, adding that the investment "proudly honours the highly skilled associates who have earned a global reputation for manufacturing excellence."
Honda said it will continue to monitor market conditions and review its procurement and business strategies going forward.
