Honda plans to set up EV factory in Canada to boost capacity in North America

Chiang, Jen-Chieh, Taipei, DIGITIMES Asia 0

Credit: Honda

Honda plans to construct an electric vehicle (EV) factory in Canada and is considering producing EV batteries to strengthen its EV production business in North America. The total investment scale could reach JPY2 trillion (approximately US$13.8 billion), making it Honda's largest investment project to date upon realization.

According to reports from Yomiuri and Nikkei, Honda originally stated in 2022 that it would produce EVs based on its "e:architecture" platform at its Ohio factory in the United States by 2026, aiming to enter the North American market in the same year. If a factory is also established in Canada, it would be Honda's second EV factory in North America, and the annual production capacity for EVs in North America is expected to exceed one million units.

Honda already has a complete vehicle factory in Ontario, Canada, and is considering building a new EV factory adjacent to the existing one. The investment project is expected to be decided by 2024, and the new EV factory in Canada could start production as early as 2028.

Honda aims to transition 100% of its new vehicle sales to pure electric vehicles and hydrogen fuel cell vehicles (FCVs) by 2040. By 2030, the goal is to achieve a 40% proportion in the North American market.

Honda is also attempting to produce EV batteries in-house, and the plan involves collaborating with South Korean company LG Energy Solution (LGES) to co-produce EV batteries in the United States.

In line with Canadian government policies prohibiting the sale of gasoline-powered vehicles starting from 2035 onwards and taking advantage of US policies that offer up to US$7,500 in subsidies for EVs and batteries produced in North America, Honda's efforts to enhance EV and battery production capacity in Canada are aimed at boosting EV sales in North America.

North America currently represents approximately 40% of Honda's global new vehicle sales. For the fiscal year 2023 (April 2023 to March 2024), it is estimated that Honda's annual sales in North America will be around 1.6 million units, but most of these are gasoline vehicles. Honda must accelerate EV production in North America to comply with the environmental policies and subsidy standards of the US and Canada.

Although Honda had initially agreed with General Motors (GM) to jointly develop and sell mass-market EVs, even planning to launch them by 2027, the project was terminated by Honda in 2023. However, Honda will still sell EVs produced in GM's factories in 2024. In the long term, Honda has decided to increase its in-house production of electric vehicles.