Honda gets $5B in government funds for Ontario EV battery, assembly plants

Honda is set to build an electric vehicle battery plant next to its Alliston, Ont., assembly plant, which it is retooling to produce fully electric vehicles as part of a $15-billion project to create a supply chain in the province for the Japanese automaker.

The plan — which includes up to $5 billion in public funds — is expected to see the two main plants create 1,000 jobs on top of retaining the existing 4,200 jobs at the assembly plant. The plant is set to produce up to 240,000 vehicles per year when fully operational in 2028.

Prime Minister Justin Trudeau said the jobs involved are at the heart of the deal.

“It’s about, yes, creating green products that Canadians can rely on into the future, but it’s primarily about investing in the workers and the communities that they are part of as these plants get built and as they work for generations to come,” he said Thursday at a news conference detailing the project.

The deal does not involve production subsidies, which were used to woo two other automakers to build battery plants in Ontario instead of the U.S. with its incentives under the Inflation Reduction Act.

But the federal government is set to give the Japanese automaker about $2.5 billion through tax credits.

Federal Finance Minister Chrystia Freeland’s recent budget announced a 10 per cent Electric Vehicle Supply Chain investment tax credit on the cost of buildings related to EV production as long as the business invests in assembly, battery production and cathode active material production in Canada.

That’s on top of an existing 30 per cent Clean Technology Manufacturing investment tax credit on the cost of investments in new machinery and equipment.

Ontario has committed to providing up to $2.5 billion directly – such as for capital costs – and indirectly, such as covering site servicing costs.

Trudeau defended the public money that is being put toward the project, saying countries around the world are competing for investments in greener manufacturing and Honda’s project will benefit Canada’s economy and communities.

“That’s not just creating jobs, great jobs for 1,000 new people around here, that’s contributing to an ecosystem that will involve parts suppliers, it’ll involve communities with vibrant art scenes and strong main streets, it’ll involve future generations of Canada building the kinds of solutions the world needs,” he said.

“Yes, there are politicians who sit back and say: ‘No, no, no, no, no. We’ve got to balance the budget at all costs, even if it means not investing in Canadian workers and investing in the future.’ Well, I think they’re wrong.”

Ontario Premier Doug Ford said Honda’s investment is a generational commitment.

“This is decades and decades down the road,” he said.

“What price do you put on that? There is no price you can put on that because we’re investing into the people. The money is staying here in Ontario. It’s not going overseas, it’s not going down to the U.S., it’s staying right here in Ontario for decades and generations to come.”