Honda delays $15-billion EV project citing demand, shifts some CR-V output to U.S.

Honda employees work along the vehicle assembly line before an event announcing plans for a Honda electric vehicle battery plant in Alliston, Ont., on Thursday, April 25, 2024. THE CANADIAN PRESS/Nathan Denette

TORONTO — Honda has postponed a $15-billion electric vehicle project in Ontario, citing market demand, and is shifting some production of its popular CR-V model intended for the U.S. market to its Ohio plant because of tariffs.

The halted investment marks by far the biggest project delay yet in Canada as the outlook for EV growth softens.

In a quarterly earnings press conference on Tuesday in Japan, chief executive Toshihiro Mibe said the company will look at where the electric vehicle market is in two years before deciding whether to keep going with the project.

“What happens after two years and the starting time of the project, we have to observe what is happening and ultimately make the decision,” he said, based on translated remarks.

While he cited EV demand for the delay, he said the company’s move to shift CR-V production to the U.S. is a more immediate result of tariffs.

“There is room to increase the production capacity in the United States, and we are trying to look into what will happen as a result of that,” said Mibe.

“In the midterm, if the tariff measures are to be in place for a long time, then we will have to increase our production capacity in the United States.”

Honda was the second largest auto manufacturer in Canada last year based on the roughly 420,000 vehicles it produced, and the CR-V makes up close to half that total.

But Honda Canada spokesman Ken Chiu said the company has no plans to cut overall production or jobs in Canada, and that the company is instead shifting which vehicles go where based on tariffs.

“We’re basically swapping export destinations of a small portion of CRVs between our plants,” he said by email.

He said the decision to postpone the EV project, which would include a battery plant, a retooled assembly line, and two other plants, has no impact on the current 4,200 people who currently work at the Honda manufacturing plant in Alliston, Ont.

The decision comes even as EV sales do keep growing, and taking more market share. In Canada, zero-emission vehicles, which includes hybrids, made up 15.4 per cent of sales last year, up from 10.7 per cent a year earlier. Fully electric vehicles made up 11.4 per cent of sales.

In the U.S., EV sales were up 7.3 per cent for 2024 from a year earlier and made up 8.1 per cent of total sales, according to Cox Automotive. It expects one in every four vehicles sold this year will likely be electrified in some way.

But while growing, demand hasn’t matched some of the expectations that led to more than $46 billion in spending commitments in Canada since late 2020.

The added costs and uncertainty of tariffs imposed by U.S. President Donald Trump, as well as his efforts to dismantle funding and support for EV adoption in the U.S., add to the challenges.

Industry pressures have seen numerous automakers pull back on EV plans, even before Trump was elected.

Last year, Ford Motor Co. delayed production of an electric SUV at its Oakville, Ont., plant and Umicore said it had halted spending on a $2.8-billion battery materials plant in eastern Ontario.

The future of Northvolt’s battery project in Quebec is also unclear after the parent company declared bankruptcy in Sweden in March.

And just last month, GM temporarily laid off hundreds of workers at its Ingersoll, Ont., plant that produces an electric delivery vehicle because it isn’t selling as well as it hoped.

Honda’s decision, affecting plans that were expected to create 1,000 jobs, came as it reported a drop in profits and more on the way because of tariffs. The company said Trump’s tariffs are expected to cut US$4.4 billion from its operating profit for this fiscal year, largely because it has so many vehicles coming from Canada and Mexico into the U.S.

Ontario Premier Doug Ford said Honda assured him it’s still committed to the EV project.

“I’ve talked to Honda, they’ve promised us they’re going to continue on with their expansion,” said Ford at an event in Pickering, Ont.

He said he was confident Prime Minister Mark Carney could reach a trade deal with Trump to create a mutually rewarding relationship that’s been growing since the first auto pact some sixty years ago.

The pullback in EV development shows the widening pressures of tariffs, said Flavio Volpe, head of the Automotive Parts Manufacturers’ Association.

He said Honda’s commitment last year had represented a massive vote of confidence in the Canadian supply base that he hopes it will see through.

“We hope to find a solution for Canada that restores confidence for ambitious projects. All Canadian auto has benefited greatly for 40 years by Honda’s continued commitment,” said Volpe.

The project was first announced in April 2024 at an event that included then-prime minister Justin Trudeau and Ontario Premier Doug Ford and was to receive support from the federal and Ontario governments totalling about $5 billion.

While some EV projects have stumbled in Canada, other companies are pushing ahead.

A joint venture between Stellantis and LG is nearing completion of a battery plant in Windsor, Ont., and Volkswagen’s PowerCo. is still building its big Gigafactory in St. Thomas, Ont., with initial production expected in 2027.

The company notes though that once complete, the plant will follow a demand-based ramp up in commercial production.

— With files from Allison Jones in Pickering, Ont., and The Associated Press

This report by The Canadian Press was first published May 13, 2025.

Ian Bickis, The Canadian Press

This is a corrected story. An earlier version incorrectly attributed a quote from spokesperson Jennifer Cunliffe to Ontario Economic Development Minister Vic Fedeli.