Honda is set to build an electric vehicle battery plant next to its Alliston, Ont., assembly plant, which it is retooling to produce all-electric vehicles, all as part of a $15 billion project expected to include up to 5 billion dollars in public resources. money.
The two plants are expected to create 1,000 jobs in addition to retaining the existing 4,200 jobs at the assembly plant.
-
Watch Honda’s announcement live here
The deal does not involve production subsidies, which were used to entice two other automakers to build battery plants in Ontario rather than the United States with their incentives under the Inflation Reduction Act.
But the federal government is expected to give the Japanese automaker about $2.5 billion through tax credits for clean technology manufacturing and investments in the electric vehicle supply chain.
Ontario has committed to providing up to $2.5 billion directly (for example, for capital costs) and indirectly, for example to cover site maintenance costs.
The $15 billion project includes the redeveloped plant, a nearby electric vehicle battery plant, as well as two key battery parts facilities (cathodes and separators) located elsewhere in Ontario.
The Honda facility will be the third electric vehicle battery plant in Ontario, following in the footsteps of Volkswagen in St. Thomas and a Stellantis LG plant in Windsor.
The agreement comes after years of meetings and discussions between Honda executives and the Ontario government, which began after the government’s last big announcement at Honda’s Alliston facility.
Prime Minister Justin Trudeau, Prime Minister Doug Ford and Honda executives were present in March 2022 when the Japanese automaker announced hybrid production at the plant, with $131.6 million in assistance from each of the two levels of government.
That started talks about potential further investment in electric vehicles, and negotiations began that summer.
Amid those negotiations, in May 2023, Stellantis and LG halted construction on their $5 billion electric vehicle battery facility, while pressuring the federal government to match what the United States would offer under its then-new law. of Inflation Reduction.
They eventually reached an agreement with Canada and Ontario under which companies will receive performance incentives of up to $15 billion over about 10 years.
The offer was also extended to Volkswagen for its electric vehicle battery installation and that deal could generate up to $13 billion in incentives.
Deputy Prime Minister Chrystia Freeland has said both Volkswagen and Stellantis needed big production incentives to help establish Canada’s green economy and ensure companies were not lured to the United States by IRA profits.
The federal government later indicated that the tap had been turned off, and Fedeli said in an interview that did not derail negotiations with Honda.
“The production incentives were intended to match American production incentives, but it is too much to continue on an ongoing basis,” he said.
“I think they were good to begin with, but the rest of the industry is now starting to realize, across North America, that you need to be where you really need to be for talent, clean energy and critical minerals.”
The other two battery plants in the pipeline have also begun to attract other parts of the supply chain, Fedeli said, which became another part of the argument for Honda, and perhaps others.
“We wanted electric vehicle manufacturers, we wanted a couple of battery manufacturers, and now we’re completing the main supply chain: cathode, anode, separator, electrolyte, copper foil, lithium hydroxide, those six main components,” he said.
“We still have some room in our incentive packages for that line of six. After that, the incentive is: we brought you a customer. We brought you a battery manufacturer… You have to go and close the deal with them. I have enough incentive to come here.
This report by The Canadian Press was first published April 25, 2024.