Honda employees work along the vehicle assembly line in Alliston, Ont., in 2024.Nathan Denette/The Canadian Press
Honda Motor Co. Ltd.’s HMC-N move to shelve its electric car project in Ontario underlines the uncertainty faced by Canada’s automotive sector as it grapples with reduced demand for electric vehicles amid doubts about its trade relationship with the United States.
Honda Canada on Thursday confirmed it has indefinitely suspended its $15-billion plan to build an EV complex in the province, citing waning consumer demand and changing business conditions.
The plan would have seen four plants built to foster the nascent Canadian EV supply chain, producing as many as 240,000 EVs – most for the U.S. market – while tapping the country’s minerals and tech talent, and providing 1,000 well-paid jobs. The federal and Ontario governments committed a total of $5-billion to the project.
The carmaker cited “evolving business conditions, a change in external resource strategy and shifting customer demand” for the move to shelve the plan, which was announced in 2024 and delayed last year.
“Based on our revised strategic objectives, we have determined that an indefinite suspension of the value chain project is appropriate at this stage,” Honda said in a statement.
U.S. consumer demand for EVs has collapsed after policy makers there dropped incentives and emissions standards.
Honda posts first-ever annual loss as EV strategy falters
Honda said in March said it would restructure its EV business – mainly in the U.S. market – in a shift that could cost US$15.7-billion.
Carmakers, including Stellantis NV, Ford Motor Co. and General Motors Co., are taking billions in writedowns and reversing plans to electrify their lineups for the U.S. market.
Sales of emissions-free cars in the U.S. fell by 26 per cent in the first quarter of 2026, year over year, according to Cox Automotive’s Kelley Blue Book. In Canada, sales of EVs fell by 36 per cent in 2025 to 170,000 and accounted for less than 9 per cent of overall sales, according to Statistics Canada.
The U.S tariffs of 25 per cent on the non-U.S. content of Canadian-made cars is another hurdle, even as Canadian trade negotiators prepare for the July talks to review the U.S.-Mexico-Canada free trade agreement. There are doubts U.S. President Donald Trump will forsake his love of tariffs and sign a deal that allows automotive products to cross borders freely, as they did for decades.
The Honda decision is yet another disappointment in the Canadian auto sector, which is centred in Ontario. Ford, Stellantis and GM have recently closed plants there, cut shifts, moved production south and delayed reopening factories.
This is despite billions of dollars in taxpayer money committed by the federal and Ontario governments.
Prime Minister Mark Carney says it's disappointing that Honda is indefinitely suspending plants to build a $15-billion electric vehicle plant in Ontario, but says he remains optimistic on the future growth of the EV market.
The Canadian Press
Greig Mordue, a professor at McMaster University in Hamilton, describes efforts by governments in Canada to foster an EV industry with tax breaks, grants and production subsidies as futile.
“The outcomes have been calamitous,” he said, pointing to GM’s plant in Ingersoll, Ont.
The factory once made the popular Chevrolet Equinox and employed 3,000 people, but it was converted to make BrightDrop electric delivery vans with millions in taxpayers’ money. The trucks sold poorly – not helped by U.S. tariffs – and the plant closed last year, putting 1,150 out of work.
Canada’s branch-plant auto industry answers to headquarters in Detroit and Tokyo, and makes cars for U.S. consumers, he says, so using government money to reshape what plants here make will lead to disappointment.
“Canada doesn’t make the market. Canada responds to the market,” Prof. Mordue said.
The tariffs, meanwhile, are blamed for GM’s decision to boost Chevrolet Silverado pickup truck production in the U.S. while cutting jobs in Oshawa, and Stellantis’ move of planned production of Jeeps to Illinois from Brampton, Ont.
Honda shelved its complex, but EV sales are getting a jolt
Other EV reversals include:
– Ford’s Oakville, Ont., plant, which closed in 2024 to be retooled to make EVs with the help of almost $600-million in government aid. Ford cancelled that plan in favour of Super Duty trucks powered by gasoline and diesel, retooling with $464.5-million from Ottawa.
– Swedish EV battery maker Northvolt AB planned a plant near Montreal but went bankrupt, despite $2.7-billion in aid pledged by governments.
– Stellantis walked away from its NextStar Energy Ltd. EV battery joint venture in Windsor, Ont., for a nominal US$100, leaving it in the hands of partner LG Energy Solution. The factory has pivoted to energy storage as growth in demand for EVs slowed.
The Detroit-based carmakers are moving production south because they have the U.S. plant capacity to do so. This is not the case for Ontario’s two largest carmakers, Toyota Motor Corp. and Honda, whose U.S. plants are fully utilized.
That could explain why their plants remain open in Ontario despite facing a combined U.S. tariff bill Prof. Mordue says is about $5-billion a year.
“The Trump tariffs have hit the industry hard,” said Vic Fedeli, Ontario’s Minister of Economic Development. “But these are multibillion-dollar companies making multibillion-dollar decisions, and we’ve told [Honda] we’re always there to work with them.”
Prime Minister Mark Carney echoed Mr. Fedeli’s concerns, but he said the shift in Canada and around the world to electric cars will continue. The trend has been underlined by the recent increases in gasoline prices caused by the U.S. war on Iran, Mr. Carney said.
Richard Norcross, mayor of New Tecumseth, Ont., where Honda’s Alliston plant is located, said he is disappointed by the company’s decision, but he still hopes the plan will eventually go forward. He urged the federal government to take a “hard look” at the policies, incentives and infrastructure required to retain Canadian auto plants and investment.
“I still think we can come out the other side,” Mr. Norcross said by phone, “and we’re going do everything we possibly can to make it work.”
With reports from Nicolas Van Praet and Laura Stone