Slower market demand, tariffs and evolving production strategies cited as some of the reasons why the Japanese automaker is pausing its Canadian EV plans

Honda Canada is postponing its massive four-part $15-billion electric vehicle project in Ontario.

Speaking during Honda’s quarterly earnings call in Japan, CEO Toshihiro Mibe attributed the delay to a “recent slowdown of the EV market,” and said the company will re-evaluate the project’s timing over the next two years.

Honda will continue monitoring global market trends before committing to a new start date.

Despite the pause in investment, Honda Canada, which is based in Alliston, Ont., stressed that operations at its existing plant remain stable. “The facility will operate at full capacity for the foreseeable future, and no changes are being considered at this time,” the company said in a statement.

A year’s difference

This announcement is astark contrast to the optimism from just over a year ago when Honda unveiled its “historic” Ontario EV initiative last April.

At the time, Honda promised to bring a new battery plant, a retooled assembly line and two additional parts facilities to Ontario. The project was eligible for up to $5 billion in government support, split equally between federal and provincial contributions.

Once fully operational (originally targeted for 2028) the expanded Alliston plant was expected to produce up to 240,000 vehicles annually.

It would have also created 1,000 new jobs, while securing employment for the existing 4,200 workers.

Tariffs and sinking profits

While EV demand continues to grow (market penetration of zero-emission vehicles reached 14.6 per cent overall in Canada last year, according to Statistics Canada), Honda’s latest financial results highlight the growing pressures facing global automakers.

In its annual earnings report, Honda Motor Co. revealed that its profit for the fiscal year ending in March dropped 24.5 per cent from the previous year. The Tokyo-based company posted earnings of 835.8 billion yen (approximately $8 billion), down from 1.1 trillion yen a year earlier, even as annual sales grew 6.2 per cent to 21.69 trillion yen (roughly $205 billion).

Looking ahead, Honda is bracing for further financial challenges.

Honda’s executive vice-president Noriya Kaihara warns that tariffs introduced by U.S. President Donald Trump on vehicles imported from Canada and Mexico could cut as much as 650 billion yen (US$4.4 billion) from operating profits through fiscal 2026.

In response, Honda is adjusting its production strategy.

The automaker announced this week that it will shift some production of its best-selling CR-V production from Canada to its plant in Ohio to better align with the evolving trade landscape. However, the company emphasized that this change will not affect the overall output or employment at the Alliston plant.

EV project setbacks across Canada

Honda is not the only company in Canada to put the brakes on its EV projects.

The last two years has seen several major setbacks:

• Ford Motor Co. delayed the launch of its electric SUV at the Oakville Assembly Complex.
• Umicore put a hold on its $2.8-billion battery materials plant in eastern Ontario.
• Northvolt’s future in Quebec is in doubt following the parent company’s bankruptcy in Sweden.
• E-One Moli halted its $1-billion battery factory expansion plans in British Columbia.
• General Motors temporarily laid off hundreds at its Ingersoll plant due to low sales of its BrightDrop electric delivery vans.

These setbacks come even as Canada has seen over $46 billion in EV-related foreign investments and commitments since 2020.

“The market cooling consequences of U.S. tariff actions continue to be felt by everyone, Honda included,” said Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, on social media.

“We hope to find a solution for Canada that restores confidence for ambitious projects.”