Honda's EV delay shows how Canada's new Industry Minister has her work cut out for her

Globe and Mail

14-05-2025

On the day that Mélanie Joly was sworn in as Canada's new Industry Minister, one of the world's largest automakers served warning that she has her work cut out for her, when it comes to maintaining any momentum for this country's nascent electric-vehicle sector.
The announcement by Honda Canada that it is delaying its $15-billion plans to make EVs and EV batteries in Ontario, by at least two years, is on its face less damaging than some other recent setbacks for the industry.
Nobody is being laid off, as when General Motors last month halted production of its BrightDrop electric delivery vans, because Honda is maintaining its existing (non-electric) vehicle assembly. Nor is Honda equivocating (for now, at least) about its commitment to Canadian EV-making in the long run, in contrast to the uncertain futures of everything from Umicore's plans to make battery materials in Ontario, to the Quebec battery plant that was under construction by troubled Northvolt AB.
'We have determined that the EV value chain initiative in Canada is essential to our electrified future,' Honda spokesperson Ken Chiu said on Tuesday. 'There are no plans to cancel or relocate the project at this time.'
But in terms of what it says about how Canadian industry will weather the storm caused by U.S. President Donald Trump's trade war, and by the impact of his anti-EV policies on an already slow-growing North American EV market, Honda's decision to pump the brakes may be more unsettling than any of those other developments.
That's because of both the nature of Honda's plans, and the nature of the company itself.
Among the major government-backed EV-making investments announced in the past few years, Honda's stands to be both the biggest and the best value from a Canadian perspective.
Whereas Stellantis NV and LG Energy Solution demanded up to $15-billion in cumulative production subsidies for a roughly $5-billion capital investment in a battery factory in Windsor, and Volkswagen Group similarly required up to $13-billion in production subsidies for a $7-billion battery plant, Honda settled for a comparatively modest $5-billion in subsidies for an investment that promises to be worth more than the other two combined.
Equally important as the dollar figures are what they cover. Honda's plans are by far the broadest – encompassing not just battery-making but also vehicle assembly and a pair of partnerships, with Japan's Asahi Kasei Corp. and South Korea's POSCO Future M Co. Ltd, to produce battery materials.
For a federal government – and an Ontario provincial government – whose stated intention is to capitalize on Canada's combination of natural resources and manufacturing expertise to build a start-to-finish EV supply chain, there could hardly be a better anchor investment. Nor is there one they could less afford to lose.
As for why Honda was willing to commit to it in the first place, without demanding that Canada match subsidies that were then available in the U.S. as Stellantis and Volkswagen did, a common refrain within the industry is that its corporate culture is different.
As with Toyota Motor Co., the other Japanese car-making giant with a long-time presence in Ontario, Honda has a reputation for being more patient and conservative in strategic decision-making than its North American or European competitors. It tends to stay and expand where it already has a footprint, and is less inclined to just follow whatever money governments are putting on the table.
That's cause for some reassurance, about the postponement being just that, and not a sign that Mr. Trump's war on the Canadian auto sector will cause Honda to pull up stakes and head south.
But when the least kneejerk of companies feels compelled to significantly adjust course, it's a sign of how strong the headwinds are.
In the here and now, Honda is forecasting a 70-per-cent drop in its net profit globally in the 2025-26 fiscal year, which it attributes largely to Mr. Trump's tariffs.
In plan-making for the rest of this decade, it's the uncertainty – about the ability to export into the U.S., about the extent to which North American EV demand will be throttled, about whether economic chaos affects purchases and investments of all sorts – that's the obvious cause for adopting a wait-and-see attitude. Honda alluded to as much on Tuesday, apropos the investment in Canadian EV-making, when it said it will 'continue to carefully monitor market conditions and reassess as needed.'
For Prime Minister Mark Carney's new government, and to some extent Ontario Premier Doug Ford's provincial one, the challenge will be to somehow mitigate that risk as much as possible, even if there is no way to eliminate it as long as Mr. Trump holds office.
There were a few hints of how they will attempt to do so during this spring's federal election campaign, including Mr. Carney's promise to explore purchase subsidies for EVs produced in Canada. But his government may have to move more decisively and expansively than those commitments suggested.
At the same time, Ottawa and the provinces (not just Ontario) now have all the more reason to try to expedite the mining of raw battery materials that are supposed to be one of the biggest draws for automakers that have committed to Canadian battery plants. The more completely the supply chain is taking shape, the more that starting or expanding production here will make sense, and the more that Canada will benefit.
That imperative is not a surprise, exactly.
At the end of last year, shortly before ending his tenure as industry minister – during which he had led Canada's successful courtship of automakers' EV-making commitments – François-Philippe Champagne told The Globe and Mail that the next step would be consolidating those investments.
It will now be up to Ms. Joly to make good on that, in a more urgent and fraught environment than Mr. Champagne or anyone else fully anticipated even a few months ago.