Can Canada help Honda get its groove back? 

Honda’s vehicle designs in the 1990s played a big role in inspiring the EV transition, and paved the way for the growth of Japanese manufacturers in Canada. You’d never guess it based on the headlines in recent years, with advocacy groups like Greenpeace slamming the automaker’s lagging decarbonization efforts. 

“Honda is pretty good technologically, especially with their internal combustion engines,” said Sam Fiorani, vice-president of global vehicle forecasting at AutoForecast Solutions. “Honda has always been an engine manufacturer that happened to make cars.” 

As a result, he said, “they got a late start” in the EV race currently underway. 

The company is trying to reclaim its high-tech image, announcing last week a brand-new, futuristic EV line called 0 Series that it said “symbolizes how Honda is undergoing a major transformation” and going back to its roots. 

That’s the context for last week’s report from Nikkei that Honda was considering building a US$14-billion EV plant in Canada, focused on advanced technology like solid-state batteries. Such an investment would double Volkswagen’s $7-billion plan for its Canadian battery plant, blowing well past Stellantis and LG’s $5.1-billion investment. 

Finance Minister Chrystia Freeland said she met with Honda last week. Ontario Premier Doug Ford said at an event last summer, “Toyota, Honda, GM, they’re all looking to expand the battery facilities, right here in Ontario.” However, Honda said in a statement this week it’s “considering a number of initiatives” for electrification, but is focused on its Ohio EV hub.

The caterpillar that enters the cocoon: Honda has previously said it will invest nearly $1.4 billion between 2022 and 2028 to upgrade its Canadian plants for electrification, with $131.6 million each from the federal and Ontario governments, though it has so far focused on making hybrid CR-V and Civic models. The Prologue is the only EV sold in Canada thus far. Honda Canada CEO Jean Marc Leclerc told The Logic last year that the conditions weren’t right to push some customers to EVs, citing unstable battery-metal prices. 

The pressure to become a butterfly: Honda was still lagging its pre-pandemic U.S. market share as of November 2023, according to Cox Automotive. Automakers are already designing the vehicles that will be popular years in the future, said Fiorani, so Honda must be ready to switch to the EV path. 

J.D. Ney, Canadian automotive practice lead for J.D. Power, said while he couldn’t comment specifically on Honda’s future plans, hybrids remain “enormously popular” in Canada, with battery-range anxiety holding potential EV buyers back. 

That could explain Honda’s interest in solid-state batteries. 

“We’re looking at the next iteration of batteries being solid-state,” said Leclerc in an interview with The Logic last year. “We are being very bullish on that technology for the future, to increase the adoption or to lead the mass adoption of electric vehicles.” 

The butterfly effect: A US$14-billion plant would be one of the biggest yet, both for the country and the company, and could have a ripple effect on Canada’s economy. 

Honda already out-produced Ford and General Motors in Canada in the first half of 2022, according to data collected by the Global Automakers of Canada. A plant upgrade could mean new business to help establish burgeoning Honda suppliers in Canada like POSCO and Dongshin Motech.  

“They’ve pivoted very well, and are looking to transition into EVs in the next five to 10 years, which will be perfect for when the market is ready for them,” said Fiorani.

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