Honda Canada is set to build an electric vehicle battery plant near its auto manufacturing plant in Alliston, Ontario, where it also plans to produce fully electric vehicles.
The Canadian Press has learned that the federal and Ontario governments will make the announcement this week.
Highly placed sources with information on the matter have confirmed the deal, but have not yet been able to provide figures for the project.
Ontario Premier Doug Ford told a First Nations conference Monday morning that there will be an announcement this week about a new deal that he said will be double the one with Volkswagen announced l ‘last year.
This electric vehicle battery factory, which is planned to be built in St. Thomas, Ontario, will cost $7 billion in capital.
The Honda plant will be the third electric vehicle battery plant in Ontario, following in the footsteps of Volkswagen and a Stellantis LG plant in Windsor, Ontario. Although both deals involved billions of dollars in production subsidies to compete with U.S. Inflation Reduction Act subsidies, the one with Honda is expected to involve capital commitments and tax credits.
Federal Finance Minister Chrystia Freeland’s recent budget announced a 10% electric vehicle supply chain investment tax credit on the cost of buildings related to electric vehicle production, at provided that the company invests in the assembly, production of batteries and production of active cathode materials in Canada.
This is in addition to a 30% clean technology manufacturing investment tax credit on the cost of new machinery and equipment.
The deal comes after years of meetings and discussions between Honda executives and the Ontario government, the sources said.
The governments of Canada and Ontario paid a total of $131.6 million to Honda in March 2022 for the production of hybrid vehicles at the Alliston plant.
At the time of this announcement, discussions on a greater investment in electric vehicles began, according to the sources. Negotiations began that summer.
Ontario Economic Development Minister Vic Fedeli visited Japan in fall 2022, the first of three visits to meet with Honda Motor executives about the project. Senior officials from the Japanese company came to Toronto three times to meet with government officials, including Doug Ford twice.
During a Honda executive trip to Toronto in March 2023, Ontario officials, including Mr. Fedeli, touted the province as a destination of choice for investments in electric vehicles and batteries, as part of a strong pressure from the provincial government to realize Doug Ford’s vision of a complete production chain for electric vehicles in the province.
Negotiations took a major step forward in July when Ontario sent a formal letter to Honda Canada, signaling its willingness to offer incentives for a battery plant and electric vehicle production. Honda Canada executives then met with Mr. Ford in November and December.
The latest meeting sealed the deal, according to sources.