Honda to withdraw from Canada projects
Honda is considering a complete withdrawal from its planned projects in Canada, depending on how North American electric vehicle policies evolve, according to a report by Nikkei Asia. The company already decided in May 2025 to delay the construction of a new battery-electric vehicle plant and an associated battery factory in Ontario by two years. The original plan to begin operations in 2028 has since been pushed back to at least 2030.
However, the latest reports from Japan suggest that even this revised timeline may no longer be viable. The project’s future is now uncertain and heavily dependent on market developments in North America. “Seeing market conditions as unlikely to improve in the short term, Honda decided to indefinitely suspend the project, and has entered talks with the Canadian government,” Nikkei Asia reports.
In 2024, Honda announced a total investment of 15 billion Canadian dollars (approximately 9.3 billion euros at the current exchange rate) in an electric vehicle plant with an annual capacity of 240,000 vehicles and a battery factory to supply the facility. The Japanese automaker intended to manufacture electric models for North America, particularly for the US market, to capitalise on local EV incentives.
By producing vehicles and batteries in Canada, Honda would have met the criteria of the Inflation Reduction Act and could have simultaneously benefited from substantial subsidies offered by Ottawa. The Canadian government aims to leverage its raw material wealth to establish a complete supply chain for electric vehicles and batteries. Honda had already secured funding commitments and acquired the land for its industrial complex.
However, recent developments in the US have significantly altered the landscape. The administration of US President Donald Trump has reversed many of his predecessor Joe Biden’s EV policies, terminated the key EV tax credit prematurely, and scrapped other initiatives. Following a brief boom ahead of the subsidy’s expiry, the US EV market has collapsed, with a 36% decline in the fourth quarter compared to the previous year. The first quarter of 2026 is expected to provide clarity on the new market baseline.
Honda’s leadership no longer believes in a short-term recovery of the EV market in the US. For example, the battery-electric SUV Acura ZDX, developed in collaboration with GM, is no longer in production, and remaining stock is being sold off. Its sister model, the Honda Prologue, is also expected to be discontinued this year. Additionally, the joint venture Sony Honda Mobility, which developed the electric vehicle brand Afeela, has been wound down, and its nearly completed debut model will not enter the market. The battery-electric vehicles of the ‘0 Series,’ intended for North America, have also been halted. While Honda’s US plant in Ohio is equipped to produce battery-electric vehicles, hybrids, and internal combustion engine vehicles in parallel, production will initially focus on petrol-powered vehicles and hybrids. Even if demand for electric vehicles in the US were to rebound, tensions between Washington and Ottawa raise doubts about whether Canada remains a viable location for the EV plant.
Instead of pursuing multiple parallel EV projects, Honda now finds itself without a single battery-electric vehicle model in its US portfolio. The company plans to reduce its global investments in electrification and software and develop a new strategy for North America, with a renewed focus on hybrids.
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