Achi news desk-
Honda is set to build an electric vehicle battery plant next to its Alliston, Ont., assembly plant, which it is retooling to produce fully electric vehicles, all part of a $15 billion project expected to include up to $5 billion in public . money.
The two factories are expected to create 1,000 jobs on top of retaining the current 4,200 jobs at the assembly plant.
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The agreement does not involve production subsidies, which were used to lure two other automakers to build battery factories in Ontario instead of the United States with its incentives under the Inflation Reduction Act.
But the federal government is expected to give the Japanese automaker about $2.5 billion through tax credits for clean technology manufacturing and electric vehicle supply chain investments.
Ontario has committed to providing up to $2.5 billion directly – such as for capital costs – and indirectly, such as covering site servicing costs.
The $15-billion project includes the retrofitted factory, a nearby electric vehicle battery plant, as well as two key battery parts facilities – for cathodes and separators – located elsewhere in Ontario .
The Honda facility will be the third electric vehicle battery plant in Ontario, following in Volkswagen’s footsteps in St. Thomas and LG’s Stellantis factory in Windsor.
The agreement comes after years of meetings and discussions between Honda executives and the Ontario government, which began after the last major government announcement at Honda’s Alliston facility.
Prime Minister Justin Trudeau, Premier Doug Ford and Honda executives were on hand in March 2022 when the Japanese automaker announced hybrid production at the plant, with $131.6 million in support from each of the two levels of government.
That started conversations about possible greater investment in electric vehicles, and negotiations began that summer.
In the midst of those negotiations, in May 2023, Stellantis and LG stopped construction on their $5 billion electric vehicle battery facility, as they pressed the federal government to match what the U.S. was proposing it under his new Inflation Reduction Act at the time.
They eventually reached an agreement with Canada and Ontario that will see the companies receive performance incentives of up to $15 billion over about 10 years.
The offer was also extended to Volkswagen for its electric vehicle battery facility and that deal could result in up to $13 billion in incentives.
Deputy Prime Minister Chrystia Freeland has said that major production incentives are necessary for Volkswagen and Stellantis to help establish Canada’s green economy and ensure that the companies are not lured to the United States by the benefits under the IRA.
The federal government later indicated that a tap had been turned off, and Fedeli said in an interview that he was not stopping the talks with Honda.
“Production incentives were supposed to match America’s production incentives, but it is far too much to continue with it continuously,” he said.
“I think they’re good to begin with, but the rest of the industry is now starting to realize, across North America, that you need to be where you need to be for the talent, clean energy and critical minerals.”
The other two battery plants in the works have also begun to remove other parts of the supply chain, Fedeli said, which became another part of the pitch for Honda – and perhaps others.
“We wanted EV manufacturers, we wanted a couple of battery manufacturers, and now we’re filling out the big supply chain: cathode, anode, separator, electrolyte, copper foil, lithium hydroxide, those six big components,” he said. .
“We still have some room in our incentive packages for that line of six. After that, the incentive is: we brought you a customer. We brought you a battery manufacturer … It You have to go make your deal with them. You have enough motivation to come here.”
This report was first published by The Canadian Press on April 25, 2024.
