- Honda Motor Co. (NYSE:HMC) is gearing up to build Canada’s first comprehensive electric vehicle supply chain in Ontario for C$15 billion
- Honda will build four manufacturing plants in Ontario and a battery manufacturing plant with the support of the Canadian federal government
- This will strengthen the company’s EV supply chain system and prepare for future EV demand across North America
- Shares of Honda are down 2.46 per cent to US$33.57
Honda Motor Co. (NYSE:HMC) unveiled a major win for Canada’s electric vehicle (EV) industry on Thursday at its Honda Canada facility in Alliston, Ontario.
In a news release, the Japan-based automobile company stated that thanks to support from the Canada’s federal government, it will build four manufacturing plants in Ontario as well a battery manufacturing plant. Honda made the announcement in Alliston along with Prime Minister Justin Trudeau, Ontario Premier Doug Ford and other dignitaries.
The Honda EV supply chain will also include a cathode active material and precursor (CAM/pCAM) processing plant through a joint venture partnership with POSCO Future M Co and a separator plant through a joint venture partnership with Asahi Kasei Corporation.
It is expected that the EV assembly plant will produce up to 240,000 vehicles per year once it is fully operational by 2028. Honda also expects that the EV battery plant will have a capacity of 36 gigawatt hours (GWh) per year.
“As the demand for electric vehicles continues to grow, we will attract even more investment and position our auto, battery manufacturing, and battery material production industries as global leaders across the entire electric vehicle supply chain to create economic growth and opportunities now and for generations to come,” the Ontario government stated in a news release.
In the government’s 2024 federal budget, it announced its plans to introduce the new 10 per cent EV supply chain investment tax credit to attract investment across three supply chain verticals, including EV assembly, EV battery production and cathode active mineral production.
Honda’s new investments in eligible EV supply chain segments are estimated to benefit from federal support in the range of $2.5 billion through the proposed EV Supply Chain investment tax credit and the proposed Clean Technology Manufacturing investment tax credit.
The government of Ontario will also supply up to $2.5 billion for these segments in various incentives.
“Today’s announcement is a game changer for manufacturing in Canada. 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,” Trudeau said in a statement.
The move by Honda comes in line with its vision to strive for carbon neutrality for all its products and corporate products by 2050. As such, the automobile company has set a goal of making battery-electric vehicles and fuel cell electric vehicles account for 100 per cent of its sales by 2040.
While the EV supply chain in Canada is its first, Honda is well-positioned to achieve its goal in North America. Case in point, the company has an existing auto production plant in Ohio, which will serve as the backdrop for future EV and EV battery production.
Honda Motor develops, produces and sells automobiles, motorcycles, power products and aviation products worldwide. Honda and its partners build products in more than 60 manufacturing plants in 27 countries, employing about 197,000 workers globally.
Shares of Honda are down 2.46 per cent to US$33.57.
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