Honda Halts $11B Canada EV Plant Indefinitely, Shifts Focus to Hybrids

Honda has decided to indefinitely suspend its plan to build an electric vehicle (EV) and battery plant in Ontario, Canada, and is currently negotiating the matter with the Canadian government. The project was initially announced in April 2024, with production originally slated to begin as early as 2028, targeting an annual EV output of 240,000 units and a total investment of approximately $11 billion. Honda had already postponed the project by two years in May 2023; now, citing weak near-term demand for battery electric vehicles (BEVs) in North America, the company has opted to further freeze the initiative. Honda has already secured the land for the project and had been expected to receive financial support from the Canadian government. To date, the company has invested some funds in preparatory activities related to the project. As a result of this strategic shift, Honda anticipates recording a loss of up to ¥250 billion in fiscal year 2026. Meanwhile, Honda will accelerate its pivot toward hybrid electric vehicles (HEVs) in the North American market. The company plans to halt production of the Prologue BEV SUV—co-developed with General Motors—as early as the second half of 2024, exiting the U.S. pure-electric market once existing inventory is sold. Previously, production of the Acura ZDX BEV SUV ended in 2023, and development of three additional BEV models originally intended for the North American market was canceled in March 2024. Honda’s Ohio plant has already invested $1 billion to enable flexible production lines capable of manufacturing internal combustion engine (ICE), hybrid, and BEV models on the same assembly line. With BEV development now paused, these lines will be repurposed for ICE and hybrid vehicles. Additionally, the joint-venture battery plant Honda established with LG Energy Solution in Ohio will also shift its focus: instead of supplying batteries exclusively for BEVs, it will now produce batteries for hybrid vehicles and energy storage systems. Honda is acquiring the plant’s assets from the joint venture and retaining the flexibility to switch production between hybrid and BEV batteries depending on future policy developments.