Honda to Establish C$15 Billion Electric Vehicle Value Chain in Ontario

In a bid to expand its electric vehicle (EV) capabilities, Honda Motor (NYSE:HMC) has announced plans to invest approximately C$15 billion to establish a comprehensive EV value chain in Ontario, Canada.

The investment reflects Honda's efforts to meet the increasing long-term demand for EVs in North America.

“Today's announcement is a historic investment by a manufacturer in the Canadian auto industry,” said Honda Canada President and CEO Jean Marc Leclerc in a company announcement on April 25. “It proudly honors the highly skilled associates who have earned a global reputation for manufacturing excellence and represents Honda’s recognition of the long-term attractiveness of the Canadian electric vehicle manufacturing ecosystem.”

The proposed EV value chain will include the construction of an innovative EV assembly plant and a standalone battery manufacturing facility in Alliston, Ontario. Additionally, Honda plans to build a cathode active material and precursor (CAM/pCAM) processing plant and a separator plant through joint venture partnerships.

Once operational, the EV assembly plant is expected to produce up to 240,000 vehicles per year, with the battery manufacturing facility boasting a capacity of 36 gigawatt hours annually.

The project is anticipated to create over 1,000 new manufacturing jobs in Ontario, while also generating significant spinoff employment opportunities across various sectors.

"Today’s announcement is a game changer for manufacturing in Canada,” said Justin Trudeau, Canada’s prime minister. “Honda’s investment is a vote of confidence in Canada, in Canadian auto workers, and in our manufacturing sector. Together, we’re creating good-paying jobs, growing our economy, and keeping our air clean."

Honda's investment aligns with its transition toward carbon neutrality, with a target to achieve 100 percent zero-emission EV sales by 2040. The move also involves supplementary investments such as retooling existing facilities and establishing a joint venture EV battery plant with LG Energy Solution (KRX:373220), with an expected investment of US$4.4 billion.

The company views the establishment of the EV value chain in Ontario as a strategic step toward achieving this goal, leveraging the region's skilled workforce and supportive business environment.

Collaboration with the Canadian and Ontario governments will also play a crucial role in driving innovation and providing incentives to support the project. The federal government's new investment tax credits and provincial incentives aim to promote low-emission manufacturing and attract investments in EV supply chain segments.

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Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.