After first-ever full-year loss, Honda suspends Ontario EV plant ‘indefinitely’

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Honda is “indefinitely” suspending plans for a $15-billion electric vehicle project in Ontario as part of a larger overhaul of the automaker’s business model.

Honda Global CEO Toshihiro Mibe held a press briefing in Tokyo on Thursday, saying the company will focus on rebuilding its automobile business structure over the next three years and reallocate more resources to hybrid models that “are currently high in demand.”

The announcement comes as the automaker posted a US$2.7 billion loss on Thursday -- its first-ever full-year loss -- in large part due to the heavy costs of its EV strategy as U.S. President Donald Trump’s policies shift away from EVs. The Trump administration has eliminated tax credits and rolled back emissions standards.

Nikkei Asia first reported last week on Honda’s decision to pause the EV value chain in Alliston, Ont. - a project that was first announced in 2024 that would have created 1,000 direct jobs.

At the time, neither the company nor government officials would confirm the news.

Last week, Prime Minister Mark Carney acknowledged that the Canadian auto industry is facing “challenges,” in part due to U.S. tariffs.

Finance Minister Francois-Philippe Champagne, meanwhile, has spoken about “a delay” with the transition to electric vehicles (EVs) around the world.

“The word is ‘hold.’ It’s not unique to Canada. ... If you look at what’s happening in Europe, what’s happening also in the United States,” Champagne said in an interview last week with CTV’s Your Morning. “It’s just that the market has been shifting. If you ask my opinion, it’s been shifting a bit because of policies south of the border.”

Honda: Decision does not affect current jobs

In a statement on Thursday, Honda Canada said the indefinite suspension of EV project “does not affect current employment or production levels at our existing manufacturing facility” in Alliston, Ont.

“Despite evolving business conditions, Honda’s flexible manufacturing approach remains an industry hallmark, supporting 40 years of continuous Canadian production and the future of our Alliston, Ontario facility,” the statement goes on to say.

The company also said it “will continue reviewing our future procurement and business strategies, while carefully monitoring market conditions.”

In May 2025, Honda announced it would delay the project for two years, with the company saying it would examine where the EV market is before deciding whether to move forward with the project.

When it was first announced, the EV complex was described as “Canada’s first comprehensive electric vehicle supply chain” and was slated to be operational in 2028. The new assembly plant was expected to produce up to 240,000 vehicles per year.

The project was also expected to receive $5 billion in public funds from the federal government and Ontario, but none of that money has been distributed according to government officials.

Honda’s latest move comes just months after the Carney government unveiled its five-point auto strategy, aimed at transforming the Canadian auto sector. The strategy includes a new EV rebate program and a repeal of a mandate requiring 100 per cent of new car sales to be electric by 2035 in favour of new emissions standards.

With files from The Associated Press