Canada's EV Dream Is Falling Apart | Honda Pulls Plug on Historic Deal - Episode #143

Welcome to Tav's Headline News Reviews! 

Honda has suddenly put its planned $15 billion Ontario EV plant in Canada on hold, leaving many wondering what led to this unexpected decision. In this video, we'll delve into the possible reasons behind Honda's move and what it could mean for the future of electric vehicle production in Canada. With the automotive industry rapidly shifting towards electric vehicles, this development has significant implications for the industry as a whole.

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Transcript

SPEAKER_00 0:08

Joining us on Saturday, May the 9th, 2026. Well, we had some big news come out of the auto industry this week. Canada's electric vehicle Dreams just hit a major roadblock. It was announced in Japan that Honda's massive $15 billion EV investment in Ontario once was promoted as a historical win for Canadian auto manufacturing in Canada, is now facing serious uncertainty. Reports from Japanese media says that Honda indefinitely put a freeze on its plans for EV manufacturing in its complex in Alliston, Ontario. And that's a huge manufacturing complex in Alliston, Ontario. This is not just another corporate delay. If you remember last year they delayed, now it's completely frozen. Canada's biggest industrial project, once called a cornerstone of Ontario's EV future, and a symbol that Canada could complete compete in the global battery and electrical vehicle race, now is totally then blown out of the water. The project appears to be caught between slowing EV demand, U.S. tariff pressure, political uncertainty, economic uncertainty, and a major shift away from EV cars. I have two articles on the screen. One is the actual announcement by Honda back in 2025 of its plans to invest in Canada's EV manufacturing. The other one is a news clipping from Global News that just reaffirms that investment by Honda. Back in April of 2024, Honda announced what looked like a game-changing investment in Canada. The plan was worth $15 billion Canadian or about $11 billion US. Honda's original goal was to begin operations in 2028 with capacity to produce about 240,000 EV vehicles per year. The project was expected to create roughly a thousand plus new jobs in Alliston. For Ottawa and Queen's Park, this was more than a factory announcement. Canada has been trying to position itself since the Trudeau administration as a leader in EV manufacturing and telling everyone that we have the critical middles, we have clean electricity, we already have the auto manufacturing experience, we have access to the US market, and government incentives were being handed out to any manufacturer that was ready to go for a ride on this EV production plan. The federal and Ontario government had pledged support worth about five billion dollars. At the time, the message was clear. Canada was not just going to buy EV vehicles, it was going to build them. So it's not that there was any hint or anything of this announcement. There were warning signs. The first major warning came in May of 2025. Honda announced it was postponing the Ontario EV investment by about two years. So they uh last year they announced that they were going to postpone the investment. Now they're saying it's it's frozen. It's dead. I think it's going is where it's headed. The company cites a slowdown in EV market. People are just not buying EVs as people had anticipated. The delay affects the battery plant, the retooling of the facility in Alliston. Honda said at the time that the existing employment at its Alliston plant would not be affected, but the delay of the project had been expected to retain 4,200 existing jobs and add another thousand new jobs to support this EV initiative. At that point, the story was framed as a pause, not a cancellation. But now the latest reports suggest that the situation may be even more serious. So on May 6, 2026, reports started to surface, rumors started to surface and emerge that Honda may be moving to temporary delay or to permanently freeze the investment. The Canadian press cited Japanese media sources in Japan that Honda plans to be more definitely halting the development of its $15 billion EV complex and its investment. The reports say a sluggish US demand for EVs is pushing Honda to focus on other products that produces in North America instead of a full battery electric vehicle. That shift is important because it shows that this is not just a Canadian problem. It's maybe part of a broader reset across the auto industry as it relates to EV manufacturing. The automakers are looking at the market and asking themselves, are customers really purchasing EVs? And are they purchasing them fast enough to justify the massive investment that the auto industry needs to make? Well, apparently Honda's made that decision. They're not going to do it. Now, just to confirm, just to reiterate to you guys, as of right now, when I'm making this video, Honda Canada has not confirmed the final cancellation decision. These are sources coming out of Japan and Japanese media, but the Canadian media is just covering it wide door to door. It's like all over the place. So there must be something to it. Also, the Prime Minister, we're going to hear from him in a minute, has also made comments about it and it suggests that it's pretty well, it's frozen, it's done. The company told Global News that the report did not come from Honda itself, that it was uh reports from media sources in Japan. The federal government government also are being very careful in their wording. Um, and uh we heard some comments from the minister, the industrial minister, uh Jolie from her office. They indicated that they're in regular contact with Honda in Japan and on the Canada. The government has also pointed to the U.S. tariffs and the changing U.S. domestic policy and the pressures affecting the auto industry and the EV investment decision. Now, Canada went all in under the Trudeau administration on EVs and were promoting it as a way of a future. It may be, but maybe it's a little too early. The Prime Minister said that the government is in contact with major automakers, including Honda, but Global News reported that both uh Prime Minister Kearney and Ha Andra offered little clarity after the Japanese reports started the service in Japan. So, right now, the key point is this the project has not been officially cancelled by Honda at this point. But multiple sources and reports out of Japan have indicated and confirmed that the decision will be publicly announced soon, and they were freezing the investment indefinitely. Now, EV demand is a problem, and here's why it's a problem. The EV market is still growing globally, as we can see that China is all in on the EV manufacturing. So the growth curve is sort of slightly uneven, especially outside of North America. In North America, many customers or people that are thinking of buying EVs are still hesitating because the price of an EV vehicle is too high. Charging access is a concern. Not enough of them. The cost of charging the vehicle is a concern. Cold weather weather range, so the range of the electric EV vehicle in cold weather is a concern. Uncertainty about resale value of an EV vehicle. So that has always also been a concern. And the competition from other vehicles are it's a much cheaper choice. For example, hybrids, which is half gas, 50% gas, and 50% electric, are becoming more attractive because they offer better fuel efficiency without requiring drivers to fully charge. Honda now appears to be meaning harder towards hybrids instead of EV vehicles. They're waiting for the market to fully develop before they commit more to the EV market. Instead of betting everything on a full EV transformation, Honda seems to be saying the transformation is happening, but not as fast as they would like it. So therefore, they're bowing out of this major investment in Canada and Ontario and the auto industry here in Canada. Now, also the US tariffs and this tariff war that we have, Kuzla, is going to be a big thing for the auto industry because Canada and Ontario as well, the province is that we've been subsidizing the auto industry even before the EB became a thing, before uh Prime Minister Trudeau was putting all our cards into EB. He was we've been subsidized. Governments have been subsidizing the auto industry by giving them tax grants and and other forms of incentives to continue to manufacture in Canada, probably, but now when we have a major player like Hondo backing away and now deciding that they're not going to participate in that strategic plan for the auto industry, that's that's the concern, especially with 40,000 electric vehicles from China inbound into Canada. That's a problem. The U.S. market is a central story in this whole thing. Canada's auto industry is deeply connected to the United States and has been for many years. And I will be doing an episode specifically about the history of the auto industry in Canada and segregating that from my weekly program so that everybody has a good idea. I'm also going to do one on the pipelines in Canada. If the U.S. tariffs and tax credits change and domestic policy shifts make cross-border auto production more expensive, or uncertain how companies may delay and rethink the EV market, and that's what's happening in the States. That Honda expected its operating profit to fall sharply, partially because of the US tariffs. That matters because even at a $15 billion Canadian project depends uh largely on the North American market. So if there's any kind of restrictions that come out of Kuzma regarding the auto industry, a lot of these auto companies like Honda are going to think twice before investing, or maybe even start to partially pull out of Canada. If Honda believes that the US market is not ready for the EV market or adopting EV vehicles uh at the expected pace, uh the trade rules are becoming more unpredictable. The Alliston project becomes even harder to justify for Honda. And if it's hard to justify for Honda, it will be for other manufacturers. So I am gonna right after this slide here, I am gonna play some comments from the Prime Minister when the news broke that Honda had decided to permanently freeze the investment of fifteen billion dollars. But there's a lot of political fallout in Canada regarding this. Politically, this is a damaging story for both the federal and Ontario government. The EV strategy was sold as a major economic transformation. And I think Prime Minister Kearney had bought into that, and that's why he made that deal with China to bring in their EVs, their cheap EVs here into Canada. So the EV strategy was definitely on pace as far as the government was concerned, but now things have really changed. Supporters say these investments are necessary to protect the Canadian auto sector as the world moves away from gas-powered vehicles. Well, we might be the last to convert to electric vehicles based on everything that's going on. And don't forget, we've been subsidizing the auto industry, and I'm going to talk a little bit about that in a little while. And my final comments argue government may have over-promised, oversubsidized, and misread the entire EV market and its transformation. Auto experts and consultants are all in agreement that this is very bad news and that they've been saying that they cannot meet the goals that the government had set, the previous government, Prime Minister Trudeau, for the EV market. So this is definitely showing cracks, or it's proof that there are cracks in the EV policy, and the government now needs to change course. So now let's listen to the Prime Minister's comment when news broke this week regarding Honda's uh change in plants.

SPEAKER_01 11:34

We've looked at uh with obviously the confidence with the uh uh with the uh U.S. tariffs, uh undestified tariffs, and the other sector will continue to work with with companies in the sector, uh helping them reposition, reinvest, uh supporting workers there. I will continue to do what's necessary, including getting the right deal in Canada.

SPEAKER_00 11:52

So, what does this mean for the workers in Alliston? Well, job security. This big initiative by Honda to move to the E, transform the the plant into producing EV vehicles, that was really job security. They were going to add another thousand jobs to this to this plant. Now that's all up in the air. So uh job security is number one. Honda's a $15 billion uh Ontario EV project was supposed to be a turning point in Canada, especially in the auto industry. It was supposed to show that Canada could compete in the world when it came to EV vehicles. Well, now I think that we've fallen behind. And I think, like I said, we're gonna be the last country to be uh driving on a regular basis or in a mass way EV vehicles, unless something change changes. But now that promise is under pressure. Uh the EV market is changing, things are shifting away from EV. Um US tariffs and their policies are uncertain, creating risk, which big companies don't want any risk. And let's not forget, uh, Australia they got rid of their auto industry. They just it couldn't be supported, and they're doing fine. So this may be another sign that Canada's on auto industry is on a major decline, and it's all gonna hinge on that Kuzma agreement. One thing's for sure, it is not gonna come back to the way it was, and there's gonna be a lot of change. And don't forget, like I said, the governments, whether it's federal or provincial, they've been subsidizing the auto industry, they've been subsidizing the aviation industry in Canada, aerospace industry. Um, if we have to subsidize large industries like this, yeah, it's just a political thing, man. It's just kicking the can down the road, and these industries can't really support themselves. So government has to put in money to keep the jobs going and keep the manufacturers in Canada. And maybe the whole uh economy, the way we look at it, the way we approach it, needs to change, and maybe that's what Prime Minister Crane is trying to do. And and especially we're now going around the world trying to create deals with other countries for trade and building our internal infrastructure. Uh, it's all gonna boil down to what I said before, and I would what I've been saying all along is this Kuzma deal is gonna send us on a particular course, whether it's good or bad. I don't think it's gonna be good. It's either gonna be bad or it's gonna be okay. The government's gonna try and sell it as a great deal, it may not be a great deal, and it's all gonna hinge. The auto industry, it's all gonna hinge on the Kuzma because if we've been subsidizing it, now the EV portion is gone, and the protection of Kuzma on the auto industry, that umbrella, because they're they're 85% of what they produce is not tariff, then that all that auto industry is gonna collapse. And and that's the sad part of it. The biggest question now is simply this is this just a pause in the Canadian EV future or the first major crack in the plan? So let me know what your comments and thoughts regarding this episode. Let me know what you think, and I will definitely reply. Hey everyone, and if you enjoy these news summaries that I put out every week and you find them informative, please be sure to subscribe and give me a thumbs up. It really helps the channel. You can also catch all my episodes on my podcast up here, and you can find my podcast and YouTube music. Thanks for watching. Be safe, and we'll see you on the next one.