Honda CEO Toshihiro Mibe shakes hands with Prime Minister Justin Trudeau after Honda announced plans to build electric vehicles and their parts in Ontario with financial support from the Canadian and provincial governments, at the company's automotive assembly plant in Alliston, Ont. on April 25.
That question had already been answered, to some extent, by commitments from Stellantis NV and the Volkswagen Group to build massive battery factories in the Ontario cities of Windsor and St. Thomas, respectively. The second reason is that the subsidies for Honda from Canadian governments are much, much lower. At approximately $5-billion, they could be less than half of what Stellantis and Volkswagen will get, despite the total Honda investment being more than double the size. Rather than matching the U.S. incentives, Ottawa is giving access to investment tax credits projected to be worth about $2.5-billion, with Ontario’s government providing up to another $2.5-billion.
One is that, while the U.S. certainly would have offered more public dollars in total, the discrepancy between the two countries for an investment with these multiple components is not as big as it would have been just for a battery factory, because Washington does not subsidize EV assembly or battery materials as excessively.
The hope, in Ottawa and at Queen’s Park, will be that Honda’s investment – predicated on the long-term benefits of a Canadian EV base outweighing the short-term subsidy loss – will be strongest such signal yet. And there are certainly other companies that could follow its lead, with Toyota – the only automaker with an established Ontario manufacturing presence yet to make an EV commitment here – the most obvious possibility.