Allison Jones, The Canadian Press
Posted on Thursday, April 25, 2024 5:05 amEDT
Last updated Thursday, April 25, 2024 2:29 pmEDT
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 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 funding, is expected to allow the two main plants to create 1,000 jobs in addition to retaining the existing 4,200 jobs at the assembly plant. That plant is expected to produce up to 240,000 vehicles per year when it is fully operational in 2028.
Prime Minister Justin Trudeau said the jobs involved are at the heart of the deal.
“It is, yes, about creating green products that Canadians can rely on in the future, but it is mainly about investing in the workers and the communities they are a part of as these plants are built and as they operate for the generations to come,” he said. he said Thursday at a news conference detailing the project.
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 willing to give the Japanese automaker about $2.5 billion through tax credits.
Federal Finance Minister Chrystia Freeland’s recent budget announced an EV supply chain investment tax credit of 10 per cent on the cost of buildings related to EV production, provided the company invest in assembly, battery production and cathode active material production in Canada.
This is in addition to the existing 30 percent tax credit for Clean Technology Manufacturing investment on the cost of investments in new machinery and equipment.
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.
Trudeau defended the public money being put into the project, saying countries around the world are competing for investments in greener manufacturing and that Honda’s project will benefit Canada’s economy and communities.
“That’s not just about creating jobs, great jobs for 1,000 new people here, but about contributing to an ecosystem that will engage parts suppliers, engage communities with vibrant arts scenes and strong high streets, engage future generations of construction of Canada. the kind of solutions the world needs,” he said.
“Yes, there are politicians who sit back and say: ‘No, no, no, no, no. We have to balance the budget at all costs, even if that means not investing in Canadian workers and investing in the future.’ Well, I think they are wrong.”
Ontario Premier Doug Ford said Honda’s investment is a generational commitment.
“This is decades and decades away,” he said.
“What price do you put on that? There is no price that can be put on that because we are investing in people. The money will stay here in Ontario. “It doesn’t go overseas, it doesn’t go to the United States, it stays here in Ontario for decades and generations to come.”
Federal opposition Conservatives suggested that other foreign companies that have received subsidies from the Canadian government have not filled their jobs with Canadian workers. Concerns have been raised about the use of international workers to help build another electric vehicle battery plant in Windsor, Ontario.
“We cannot trust his latest announcement of $5 billion in Canadian taxpayer money to another large multinational corporation to be any different,” two critics wrote in a joint statement.
“The Conservatives will not allow Justin Trudeau to betray union workers and Canadian taxpayers again.”
The $15 billion Honda project includes the redeveloped plant, a nearby electric vehicle battery plant, as well as two key battery parts facilities located elsewhere in Ontario. Honda and POSCO Future M Co., Ltd. will build a cathode active material and precursor processing plant, and the automaker will also build a separation plant through a joint venture with Asahi Kasei Corporation.
Honda global CEO Toshihiro Mibe suggested the company won’t stop there.
“In the future, Honda will consider building a comprehensive battery chain beyond the four areas of electric vehicles, electric vehicle batteries, cathode material and separators,” he said, noting that battery recycling is also key.
“Honda will achieve low-carbon value creation throughout the battery life cycle. In this way, Honda will establish a highly profitable business foundation and contribute to achieving a carbon-neutral society.”
The Honda facility will be the third electric vehicle battery plant in Ontario, following in the footsteps of Volkswagen in St. Thomas, Ont., 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.
Executives from Trudeau, Ford and Honda 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.
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 spigot had been turned off, and Ontario Economic Development Minister Vic 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 room in our incentive packages for that line of six. After that, the incentive is: we brought you a client. We brought you a battery manufacturer… you have to go and close the deal with them. You have enough incentives to come here.”
This report by The Canadian Press was first published April 25, 2024.