Honda has decided to freeze indefinitely its plan to build an electric vehicle and battery manufacturing complex in Canada, as uncertainty grows in North America amid slowing U.S. EV demand and a policy shift by President Donald Trump’s administration.
Nikkei reported Tuesday that Honda has effectively halted the project in Ontario and has begun talks with the Canadian government. The company is also said to be considering scrapping the plan altogether depending on the policy environment in North America.
The project, which includes an EV plant and a battery plant, was valued at 15 billion Canadian dollars (about 16 trillion won). It was planned to have annual capacity of about 240,000 vehicles, and land acquisition and discussions on government support were largely underway. Honda had aimed to start operations in 2028, but delayed the start by about two years in May last year as EV growth fell short of expectations. It has now opted for an open-ended freeze.
The move signals a broader reset of Honda’s North American EV strategy. In March, Honda announced it would stop developing a flagship EV for the U.S. market and said it planned to book losses of up to 2.5 trillion yen (about 22 trillion won), while formally shifting emphasis away from EVs and toward hybrid vehicles. This time, the pullback extends to production-site investment.
The shift is also affecting partnerships. Sony Group’s EV joint venture with Honda, Sony Honda Mobility, announced in March that it would halt development of its standalone EV, the Afeela. On April 21, it decided to reassign about 400 employees back to the two parent companies. Nikkei said the venture judged profitability would be difficult as Honda revised its EV strategy, describing the effort as a reorganization that is effectively “starting over.”
Nikkei pointed to U.S. policy changes as a key factor. The previous Joe Biden administration spurred North American EV investment competition after introducing EV purchase tax credits under the 2022 Inflation Reduction Act. But President Trump abolished the EV tax credit and, late last year, eased average fuel economy rules for automakers. With less pressure to expand EV output, automakers are adjusting strategies.
U.S. sales data show the slowdown. Cox Automotive said U.S. EV sales last year fell 2% from a year earlier to 1.27 million vehicles, and fourth-quarter sales plunged 36% from the same period a year earlier. Hybrids have gained ground: Nikkei said hybrids accounted for a record 19% of U.S. new-vehicle sales in the fourth quarter. Honda has already formalized its pivot toward hybrids and plans to end production of its North America EV, the Prologue, in the second half of 2026. That would temporarily leave Honda without an EV in its U.S. lineup.
The decision is expected to ripple into South Korea’s battery industry. Honda has been building an EV-only battery plant with LG Energy Solution, but is reported to be considering converting it for hybrid vehicles and energy storage systems.
Honda is not alone. Nissan Motor has halted plans to produce two EV models in Mississippi, and Ford has announced it would stop producing a key pickup-truck EV while planning to reflect special losses of up to $19.5 billion. General Motors also decided last year to cut about 3,300 jobs at its U.S. EV and battery plants.
Still, some analysts say the EV market overall has not turned down. MarkLines said global sales of EVs and plug-in hybrids last year rose 18% from a year earlier to 18.12 million vehicles. In China, more than half of new-car sales are EVs, reflecting continued growth. Nikkei said North America’s EV market has entered a stagnant phase, but the global market is still expanding, adding that how Honda rebuilds its EV competitiveness will be a key challenge.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.