Ford plugs into EV deal

Secures Honda investment, sets sights on Toyota pact

e expansion of Honda Canada’s production facilities north of Toronto will be a bigger investment than the EV battery facilities of Volkswagen and Stellantis combined. Honda is set to announce their plans to produce electric vehicles and EV batteries at their campus in Alliston and further production of battery parts with a partner.

e announcement, scheduled for ursday morning, almost didn’t happen as the Trudeau government tried to steer part of the investment toward Quebec. Industry Minister Francois-philippe Champagne has been trying to direct investment in the EV battery supply chain toward Quebec.

In this instance, Premier Doug Ford pushed hard for the full investment to be in Ontario, and he won. Honda, through its partnership with Asahi Kasei — a Japanese ˆrm that specializes in chemicals — will establish parts production in eastern and southwestern Ontario with the assembly happening at Honda’s plant in Alliston.

e facility, which has two assembly plants that date to 1986, produces Honda’s CRV and Civic models.

One government source, speaking on background, said the total investment by Honda in their facilities will top $13 billion.

e announcement comes as the EV sector is hitting a bumpy patch and the Trudeau and Ford governments are under criticism for being too generous with the VW and Stellantis deals. is deal with Honda will follow a much di–erent structure in terms of how the federal and provincial governments will support it.

With both VW and Stellantis, the Trudeau government o–ered production tax credits that mirrored what the Biden administration was o–ering through the

U.S. In™ation Reduction Act.

Under those terms, the companies weren’t given any funds up front but were o–ered tax breaks if employment and production quotas were met.

Due to timelines, the competition for critical mineral inputs and other factors, it’s doubtful that either company will ever see the full tax breaks, reportedly valued at $13.2 billion for VW and $15 billion for Stellantis.

Canada’s tax breaks in those deals only exist if the U.S. legislation remains in place and, with an American election this fall, the unpopular measure could be killed stateside. Honda’s deal is being described as less generous but with more stability than those agreed to in the Stellantis and VW deals.

e feds are o–ering two different tax credits to secure the Honda investment.

e clean technology investment tax credit o–ers a refundable credit equal to 30% of the cost of investments in new machinery and equipment for EV production. e electric vehicle supply chain investment tax credit o–ers a further 10% for companies that invest in all three areas the government is looking to land: EV assembly, EV battery production and cathode development.

e Ford government’s contribution to securing the deal, which it took the lead on months ago, is focused on supporting Honda’s capital investment in its new plants in Alliston. at generally means assisting with the infrastructure needed to get the plant running.

e Alliston plant employs 4,200 people, according to Honda. is expansion for both vehicle assembly and battery production will add well over 1,000 additional jobs while securing the existing employment and manufacturing output.

Watching this deal from the wings will be Toyota Canada.

It found out, via the media last fall, that the Trudeau government was rejecting its proposal for an EV battery facility as too expensive. It was an odd moment for a government that has courted the industry and asked for proposals.

While the feds walked away, the Ford government in Ontario has tried to keep Toyota at the table.

Toyota opened its ˆrst Canadian assembly plant in 1988 and now operates three plants — two in Cambridge and one in Woodstock — employing more than 8,000 people.

e company has been less aggressive in the EV market than others, saying it believes hybrids are needed at the moment with a more gradual move toward full electriˆcation.

at said, it invested in the EV space with an $8-billion announcement in October for a facility in North Carolina and $1.3 billion this year in Kentucky.

With Honda now secure, landing Toyota becomes the next big task for the Ford government.

“It’s coming. Don’t worry,” Premier Doug Ford said when asked by the Toronto Sun about Toyota.

With close to $40 billion in auto investments landed over the past three years, Ontario is on a streak. Don’t count Toyota out.

CANADIAN PRESS FILES Honda workers assemble a CRV on the production line at the vehicle maker’s plant in Alliston last April.