Honda Motor [7267:JP] is considering the establishment of an electric vehicle (EV) in Canada, with a projected overall investment of up to JPY2tr (USD14bn), as reported by Nikkei Asia on January 7. The planned EV factory might involve in-house production of batteries. Currently, Honda is evaluating several potential sites for the plant, including a location next to an existing automobile factory in Ontario. The company is set to decide by the end of the year, with the new factory to commence operation as early as 2028. Notably, Honda already launched a joint venture with South Korea’s LG Energy Solutions [373220:KS] to invest USD4.4bn to build EVs and batteries in the US state of Ohio from 2026. Therefore, the proposed Canadian EV facility will become its second facility in North America if it goes ahead as planned.

The projected Canadian factory represents one of the Japanese automaker’s biggest investments, as it looks to facilitate its shift to EV and catch US and European counterparts. North America contributes approximately 40% of Honda’s global sales, although most of them are fuel-powered cars. Honda has set a target to have EVs account for 40% of North American sales in 2030 and 80% in 2035, and the planned Canadian factory could effectively help achieve the objectives. In addition, the Canadian government’s recent announcement to phase out sales of new gasoline or diesel-powered vehicles by 2035, along with the availability of abundant renewable energy sources, have influenced Honda’s decision to produce EVs in Canada.

Sources:

https://asia.nikkei.com/Business/Automobiles/Honda-weighs-14bn-plan-for-EV-production-in-Canada

https://www.reuters.com/world/americas/honda-weighs-14-bln-plan-ev-production-canada-nikkei-2024-01-07/

https://www.bloomberg.com/news/articles/2024-01-07/honda-eyes-plan-to-build-14-billion-canadian-ev-plant-nikkei?srnd=green

https://www.bloomberg.com/news/articles/2022-10-11/honda-lg-to-invest-4-4-bllion-to-make-ev-batteries-in-ohio