Honda expected to announce multi-billion dollar deal to assemble EVs in Ontario: sources

Concluding what Ontario Premier Doug Ford is calling the “largest deal in Canadian history,” Honda is expected to announce later this week a multi-billion dollar commitment to build electric vehicles and their parts in Ontario, government sources have told CBC News.

The senior government sources, who spoke to CBC News on condition of confidentiality because they weren’t authorized to speak publicly, said the deal is expected to involve new facilities to build batteries, process cathode active materials — a component of the batteries used in electric vehicles — and assemble battery-powered vehicles.

The news was first reported by Bloomberg.

Ford didn’t name-drop Honda but he teased the deal during remarks at the annual First Nations Major Projects Coalition conference on Monday.

“This week, we landed a new deal. It’ll be the largest deal in Canadian history,” he told the crowd. “So stay tuned, I’ll be announcing it this week.”

Ford says new electric vehicle deal will be the largest in Canadian history

Ontario Premier Doug Ford, speaking at the First Nations Major Projects Coalition, urged people to ‘stay tuned’ for word of a new electric vehicle deal, which he said would be double the size of an already announced deal with Volkswagen.

Ford suggested the deal will involve multiple facilities “right across the region.”

“Everyone’s going to benefit,” he said.

Government sources said the announcement is set to be made Thursday at Honda’s plant in Alliston, Ont. Details of government subsides for the project could become public at that point.

Ford’s Economic Development Minister Vic Fedeli wouldn’t confirm to reporters that the premier was talking about Honda but suggested a massive auto deal is coming — worth something in the ballpark of $15 billion.

“We went from zero to $28 billion in three years,” Fedeli said Monday, speaking about the amount of electric vehicle investment in the province.

He suggested the new deal would bring total EV investment in the province to around “$43 billion … or a number in and around there.”

Last week’s budget, which has yet to pass Parliament, pitched a EV supply chain investment tax credit that likely acted as a sweetener for Honda. The government is proposing a 10 per cent tax credit on the cost of buildings used in three keys area of the EV supply chain: assembly, battery production and cathode active material production.

Finance Minister Chrystia Freeland offered no details when asked by reporters Monday about the anticipated deal but she praised the budget’s measures for attracting foreign investment.

“I have every confidence we’re going to see the magnetic pull of those tax credits bringing more significant investment to our country in the days and weeks and months to come,” she said during a media availability in Montreal.

Major push to attract EV makers

The anticipated Honda deal is the latest in a series of announcements of projects building up the electric vehicle industry in Canada, mainly in Ontario and Quebec.

Last year, federal and provincial governments announced a number of deals with EV battery producers Northvolt, Volkswagen and Stellantis-LGES.

Governments have defended subsidizing EV production as a way to keep pace with measures contained in the Inflation Reduction Act, a $369 billion U.S. program that offers subsidies and incentives to American companies building electric cars.

Reacting to the deal, Automotive Parts Manufacturers’ Association president Flavio Volpe said supplier interest is high.

“Honda does not make speculative term bets,” he told CBC News.

“In almost 40 years of making cars in Canada without failure or retreat, a Honda supply contract is extremely bankable.”