Canada's multibillion-dollar bets on the EV industry aren't all working out
Honda is delaying its EV project, but it’s not the only one on hold
Billions of dollars have been pledged by Canadian governments over the past few years to lure investment in electric vehicle production. The announcements came with fanfare and bold talk about making Canada a major player in the global EV market.
Honda's announcement on Tuesday that its huge investment is being put on hold isn't the only example of a project that has failed to live up to its billing. GM and Northvolt have both called a halt to major EV projects in Canada.
Here are the facts on where Canada's EV investments stand.
What is Honda putting on hold, exactly?
In April 2024, Honda announced it would build four new plants. One would be Honda's first EV assembly plant, another would be an EV battery plant, both in Alliston, Ont. There would also be two plants that make components needed to build the batteries.
It was to be a $15-billion investment that would create 1,000 direct jobs and produce 240,000 vehicles a year starting in 2028. The federal and Ontario governments each pledged $2.5 billion in direct and indirect incentives to make it happen.
Politicians draped the announcement in superlatives. Justin Trudeau, the prime minister at the time, called it the "largest auto investment in Canada's history." Ontario Premier Doug Ford called it "a game-changer for the industry."
All of that is now not happening for at least two years. Honda said the decision was made because of a slowdown in EV demand in North America.
Volkswagen
In both dollar terms and fanfare, the VW announcement in April 2023 was also big. It, too, was described as a "game-changer," in this case by the federal innovation minister at the time, François-Philippe Champagne. Volkswagen announced it would spend $7 billion to build an EV battery plant in St. Thomas, Ont.
Once fully operational in 2027, it promises to employ up to 3,000 people directly, who would make batteries for up to a million vehicles a year. It will be VW's largest plant in North America.
The federal government said it pledged $13 billion in subsidies to attract VW. But the parliamentary budget officer later said the amount was more like $16.3 billion, adding it was too early to tell whether it would pay off economically for taxpayers.
Once up and running, the batteries produced there are supposed to go to vehicle assembly plants in the U.S. For now, they may avoid tariffs. The Trump administration imposed 25 per cent tariffs on car parts, but at the last minute, it exempted parts subject to the existing Canada-U.S.-Mexico Agreement.
Northvolt's bankruptcy
The Swedish battery maker declared bankruptcy in March, and that matters to Canada.
Northvolt had planned to build a $7-billion EV battery plant in the Montérégie region on Montreal's South Shore. That investment was announced in 2023, and came with $2.9 billion in financing from the Quebec government and more than $4-billion worth of incentives from the federal government.
For now, its future is deeply uncertain. Northvolt's North American subsidiary said it was solvent and would meet its financial obligations. But that doesn't necessarily mean the Quebec project will go ahead as originally planned.
Quebec Economy Minister Christine Fréchette said, "Our wish is that the controller will start looking for a buyer who will invest to take over all North American activities and relaunch the Montérégie project."
Stellantis plant still on track
The NextStar Energy battery plant is supposed to come online in Windsor, Ont., later this year, although no firm date has been set. It will make batteries for as many as 450,000 Stellantis vehicles per year.
The $5-billion project was announced in 2022 and is expected to employ 2,500 people. Construction stopped in May 2023, after Stellantis said the federal government had not lived up to its commitments. The dispute was resolved in July 2023, when the federal and Ontario governments agreed to a new deal that includes $15 billion in tax breaks.
Some production has now started. Last year, workers began assembling batteries into groups known as modules. But production of batteries themselves hasn't begun yet.
Shortly after U.S. President Donald Trump took office in January, rumours circulated that Stellantis had stopped construction and moved 1,500 jobs to the U.S.
The company said this was false. "All of the investments Stellantis has made in Canada are on track," said Stellantis Canada head of communications LouAnn Gosselin.
GM's EV plant shuts down
GM has a factory in Ingersoll, Ont., called the CAMI Assembly plant. As of last month, it employed 1,200 workers who make electric delivery vans called the BrightDrop Zevo.
In April, GM announced the plant would shut down completely by May, with plans to re-open it at half capacity in October.
Trouble with this plant had been brewing for some time. GM said it was making adjustments to align with "current demand." It acknowledged it only sold 427 vehicles in Canada in 2024 and 1,529 in the United States.
This despite the fact that global demand for "last-mile" delivery vehicles is growing, according to Unifor, the union representing workers at the CAMI plant.
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