Honda’s planned electric vehicle plant in Alliston, Ontario, just north of Toronto, remains in development purgatory.
Construction on the $15 billion plant ceased last May amid flagging consumer demand for new electric vehicles, or EVs, with sales decreasing 28% year-over-year in the first quarter in the U.S. after federal tax credits for new and used EVs in that country expired Sept. 30. As a result, Honda has recalibrated its North American strategy to focus more on building hybrid vehicles rather than EVs.
The future of Honda's EV plant in Alliston was thrown into doubt this week when Japanese media reported that the carmaker had decided to suspend construction indefinitely after initially announcing a two-year moratorium a year ago. However, in an email to CoStar News, a Honda spokesman said the Nikkei report includes no new information.
For its part, Honda said it has no updates on the plant's status. “Construction never broke ground, other than initial surveying and land prep work. So it continues to be paused since last May 2025," spokesman Ken Chiu said in a statement.
The Simcoe Auto Mayors, a regional coalition of municipal leaders in Ontario focused on protecting the country's auto industry, said it's aware of the media reports about Honda's decision to halt plans for the plant and is ready to act.
"We remain confident in the strength of our manufacturing sector and the resilience of our local economy, and we will continue to work with our partners at every level to support its long-term success," Richard Norcross, the Town of New Tecumseh's mayor, said in a statement.
The municipal mayors group said that it will gather at Tecumseth Town Hall on May 21 "to jointly call on the federal government for targeted amendments to federal automotive policies. At that time, we will also be unveiling a new initiative aimed at supporting and strengthening Canada’s automotive strategy."
In April 2024, Honda announced plans to build the new Alliston EV plant and said it was expected to produce 240,000 vehicles per year. But the precipitous decline of new EV sales and the passage of the One Big Beautiful Bill Act in the U.S. that ended EV tax credits of $7,500 for new, and $4,000 for used, automobiles about seven years early, stymied that segment of the auto industry, although more recently EV makers have reported higher interest from car buyers due to soaring gas prices.
Discussions with government continue
When asked during a March call with analysts about whether plans for the Alliston EV plant had been canceled, Honda President and CEO Toshihiro Mibe said discussions with stakeholders, "including the Canadian government," continue.
"Considering our recent strategic reassessment, we intend to determine the future direction while also considering developments such as the USMCA [United States-Mexico-Canada Agreement]," Mibe said, according to minutes of the meeting on Honda's website. "It should be noted that the partial cancellation of EV‑related projects announced this time does not have an immediate impact on the overall vertically integrated strategic project in Canada."
On Wednesday, the Ontario government announced that Honda will not receive any subsidies for the project since construction has not yet commenced on the plant in Alliston.
“When there's no construction and there's no jobs, there's no dollars to fill. There's very, very tight guardrails,” Vic Fedeli, minister of economic development, job creation and trade, told a scrum of reporters after Question Period at Queen’s Park, a designated daily session with reporters in the Legislative Assembly when the House is in session.
"That’s our standard operating procedure. We put those guardrails in to protect taxpayer dollars. We speak to Honda frequently, as we do all of the automakers," added Fedeli.
Although the plant is on hiatus, Fedeli intimated that it hasn’t been outright scuttled and noted that the carmaker, with the production of its 2026 Rallye Red Honda Civic Hybrid, recently reached a milestone at its only Canadian facility, also located in Alliston.
“Honda has said, ‘We’re here to stay,’” the minister said. “They’ve been making cars in Ontario for 40 years. Their 11 millionth vehicle just rolled off the assembly."
However, headwinds in Canada’s auto manufacturing industry are evident on a larger scale, Fedeli said.
“There are a lot of changes in the auto sector, and we’ve seen it,” he said. “We’ve got [U.S. President Donald] Trump’s tariffs and other uncertainties, so we understand these pauses that companies are taking," he said. "We understand, but we also have faith in the sector."