Honda Mulls $14 Billion Plan To Build Electric Cars In Canada

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if you have been reading the headlines lately, every news organization has been spinning the official party line of the fossil fuel industry that sales of electric cars in America are faltering. They are going up in China, Australia, Asia, India, Africa, and most other places, but for some weird reason, US buyers are turning their backs on electric cars while unsold EVs pile up on dealer lots.

This load of this horse puckey can be attributed to the mainstream media publishing press releases from the Heritage Foundation and other Koch funded groups. Electric cars are now part of the all encompassing culture wars that have become a fact of daily life in the US. Only liberals drive electric cars, right thinking people hate liberals, therefore electric cars must be disparaged and discredited at every opportunity.

What makes it so curious is that the companies who make electric cars apparently didn’t get the memo, because they are making big plans to build factories to manufacture them and the batteries they will need — plans that will cost more than $100 billion globally between now and the end of this decade.

Honda Looks To Canada For Electric Car Production

Honda is a curious case. It dabbled and diddled with hybrid cars like the Insight, which when first introduced in 1999 had the highest fuel economy of any car sold in America, but its funky styling was its weak link. Then Honda toyed with hybrid versions of the Civic that were mechanical disasters. It even introduced the CR-Z, one of the few hybrid production cars ever sold with a manual transmission. While the CR-Z looked racy, its performance was disappointing and sales languished.

Then Honda brought out the Clarity, which originally was hydrogen powered but later was offered in both plug-in hybrid and battery electric versions. Once again, Honda elected to give the Clarity unattractive styling that led to poor sales. A few years ago, Honda introduce the Honda e in Europe. It was cute and innovative but much too costly for the city car it was.  Recently Honda hooked up with General Motors to build battery electric SUVs — one called a Honda and the other called an Acura — at the former Saturn factory in Spring Hill, Tennessee.

Then in October, Honda abruptly halted its partnership with GM. In a terse statement, CEO Toshihiro Mibe said, “After studying this for a year, we decided that this would be difficult as a business, so at the moment we are ending development of an affordable EV. GM and Honda will search for a solution separately. This project itself has been canceled.”

A Surprise Announcement From Honda

Not much more was heard about Honda and electric cars until this week when Japanese news source Nikkei announced that Honda is contemplating a $14 billion investment to manufacture batteries and electric cars in Canada. Without confirming the report, Canadian industry minister Francois-Philippe Champagne told Canada’s Global News that it reflected the country’s growing reputation as a leader in attracting green investment in the auto industry.

Honda is reportedly studying several sites, including one near its existing factories in Ontario province, Nikkei said, and the company is expected to make a decision sometime this year that would allow production to begin in 2028. In recent years Canada has worked hard to attract manufacturers of electric cars, offering tax breaks and boasting about its plentiful renewable energy sources and supplies of rare minerals used in EV batteries.

Volkswagen And Northvolt Choose Canada

Those are important considerations. In a press release on March 13, Volkswagen Group and its battery company PowerCo have selected St. Thomas in Ontario, Canada as the site for its first overseas gigafactory for cell manufacturing. The new factory will produce sustainable unified cells, with the start of production planned for 2027. Oliver Blume, the CEO of Volkswagen Group said, “Our North American strategy is a key priority in our 10 point plan that we laid out last year. With the decisions for cell production in Canada and a Scout site in South Carolina, we are fast-forwarding the execution of our North American strategy.”

After Salzgitter in Germany and Valencia in Spain, this will be the third Volkswagen Group owned battery factory worldwide and PowerCo’s first cell factory in North America. Canada offers ideal conditions, including the local supply of raw materials and wide access to clean electricity.

That access to renewable energy was a big factor in the decision by Northvolt last fall to build a battery factory in Quebec. The province has an abundance of zero emissions electricity available, thanks to its access to hydroelectric power. Northvolt is committed to making the “greenest” batteries in the world and using 100% zero emissions electricity to operate its factories will be a big part of achieving that goal.

Access to lithium is also a big part of the equation. Northvolt co-founder Paolo Cerruti said, “We would like to have as much lithium as possible from Canada.” A lithium mine near La Corne, Quebec, about 350 miles northwest of Montreal, began operations this year. Of course, the biggest benefit of all is that batteries made in Canada with materials from Canada will help the cars and trucks who use them qualify for the federal EV tax incentives contained in the US Inflation Reduction Act.

Canadian has made it a policy to match the financial incentives for battery manufacturers provided by the IRA. That strategy is paying off by attracting investments by Volkswagen and Northvolt and certainly must have been a factor in the decision by Honda to locate factories for building electric cars and batteries in Canada.

The Takeaway

This is potentially good news for those who hope to see affordable electric cars become available in North America. Honda has built a reputation as a manufacturer of high quality yet affordable cars. And yet, its approach to hybrids, plug-in hybrids, and battery electric cars has been muddled. It’s on again, off again partnership with General Motors is a bit of an enigma.

It sometimes feels like the senior management of the company is conflicted about what its goals are. There have been so many false starts for the company as it has tried to build non-traditional automobiles that were not powered exclusively by internal combustion engines that one has to wonder whether Honda is now ready to commit to a transition to electric cars or is still sniffing around the edges, trying to make up its corporate mind.

Last we knew, Honda was going to build electric cars near its existing factories in Ohio and partner with LG Energy Solution to build a battery factory in America. Have those plans now changed as well? Honda isn’t saying, at least not yet.