Honda reportedly freezes Canada EV megaproject as North American market uncertainty deepens

Honda is reportedly suspending its planned multi-billion-dollar electric vehicle manufacturing project in Canada indefinitely, dealing another blow to North America’s slowing EV sector and raising fresh questions about the pace of automotive electrification across the region.

According to multiple reports from Japanese media outlets, the automaker is reconsidering its North American EV strategy amid weaker-than-expected demand in the United States, growing policy uncertainty and the rollback of key electric vehicle incentives south of the border.

The project, originally announced in 2024, would have seen Honda invest approximately CAD$15bn in Ontario through a new EV assembly plant and battery manufacturing facility. The site was expected to begin operations in 2028 with annual production capacity of up to 240,000 vehicles.

However, Honda delayed the project by around two years in 2025 following a slowdown in U.S. EV demand. Latest reports now suggest the company has moved to suspend the development indefinitely while entering discussions with the Canadian government about the future of the investment.

Honda has not formally confirmed the reports, with Honda Canada stating it had “nothing to report at this time”.

The development marks a significant setback for Canada’s ambitions to establish itself as a major North American EV and battery production hub. Federal and provincial governments had committed around CAD$5bn in public support for the project, which was expected to generate thousands of direct and indirect jobs.

The uncertainty surrounding the investment comes as automakers across North America reassess EV production plans amid changing market conditions. Industry sources cited the removal of U.S. tax incentives for electric vehicles and declining consumer demand as key factors influencing manufacturers’ decisions.

Honda is now believed to be shifting its focus toward hybrid vehicles rather than accelerating battery-electric production in North America. Reports indicate the company is reviewing broader electrification plans, including projects linked to its Acura and Honda EV line-up.

Canadian Prime Minister Mark Carney acknowledged the sector is facing mounting challenges, pointing to ongoing tariff uncertainty and trade tensions with the United States.

“There are challenges with the U.S. tariffs, unjustified tariffs in the auto sector. We’ll continue to work with companies in the sector, helping them reposition, reinvest, supporting workers there.”

– Canadian Prime Minister Mark Carney.

Opposition politicians were quick to criticise the federal government following the reports. Conservative leader Pierre Poilievre argued Canada’s automotive manufacturing base has weakened in recent years, while trade critic Adam Chambers claimed EV-focused industrial policies had displaced some traditional vehicle production.

Ontario Economic Development Minister Vic Fedeli attempted to reassure workers and communities, stating that public funding would only be provided if the project proceeds and emphasising that Honda had maintained its long-term commitment to the province.

The reported pause also reflects broader turbulence across the global automotive sector. Nissan Motor recently announced plans to scrap EV production plans at a U.S. assembly facility, while several manufacturers are increasingly prioritising hybrid technology as consumer appetite for fully electric vehicles softens.

Despite the setback, Canadian officials continue to argue the country remains well positioned for future advanced manufacturing investment due to its skilled workforce, raw material resources and established automotive supply chain.

Industry observers note that rising fuel prices and continued pressure to decarbonise transport could eventually revive EV demand, although manufacturers are increasingly taking a more cautious approach to large-scale electrification investments in the short term.