Honda Indefinitely Freezes Canada EV Plant Construction... Revises North American Strategy

Nikkei: "Withdrawal of Plans Also Under Consideration"
Nissan to Cut 10% of Its Workforce in Europe

On May 6, the Nihon Keizai Shimbun (Nikkei) reported that Japanese automaker Honda has decided to indefinitely suspend its plans to build an electric vehicle plant in Canada.

Honda has decided to halt construction of both the electric vehicle plant and battery plant that it was planning in Ontario, Canada, and is currently coordinating with the Canadian government.

Honda vehicle. Photo by Reuters Yonhap News

Nikkei stated, "Honda judged that the situation will not improve in the short term," and added, "The company is also considering the option of withdrawing the plan entirely depending on future North American market policies."

When Honda announced the plant construction plans in April 2024, it aimed to begin operations in 2028 and planned to invest 15 billion Canadian dollars (approximately 16.0733 trillion won). The plant was designed to have an annual production capacity of 240,000 vehicles. However, with the electric vehicle market stagnating, Honda decided in May of last year to delay the start of operations by about two years.

This was due to decreased demand stemming from policy changes, such as the Trump Administration canceling electric vehicle tax credits in September of last year. In the fourth quarter of last year (October to December), electric vehicle sales in the United States declined by 36% compared to the same period a year earlier. Additionally, the deadlock in trade negotiations between the United States and Canada also had an impact.

The electric vehicle ‘Prologue’, which was jointly developed with General Motors, will also cease production in the second half of this year, and sales will end once inventory runs out. Once Prologue sales end, Honda will temporarily have no electric vehicles in its U.S. lineup. In March, Honda restructured its business to focus on hybrid vehicles and decided to discontinue development of three models—the Zero SUV, Zero Saloon, and Acura RSX—that were scheduled for release targeting the North American market.

The dedicated Honda electric vehicle battery plant, jointly built with LG Energy Solution in Ohio, will be repurposed for hybrid vehicles or energy storage systems. Nikkei reported that Honda plans to acquire assets such as buildings from the joint venture and flexibly switch production between electric and hybrid vehicles.

While Honda had announced plans to invest 7 trillion yen in electric vehicles worldwide by 2030, it now plans to scale back electric vehicle investments and reorganize its North American strategy around the increasingly popular hybrid vehicles. In 2025, Honda’s global sales fell by 8% year-on-year to 3.52 million units. In the Chinese market, sales declined by about 60% compared to the peak in 2020, as Honda lost ground to local brands in price competition.

Honda plans to hold a management policy briefing in mid-May, where it will announce growth strategies for the Chinese and Indian markets in addition to rebuilding its North American strategy.

Meanwhile, Nissan Motor also announced that it will halt production of the EV2 model, which had been planned for its plant in Mississippi, United States.

According to Kyodo News, Nissan will cut about 900 jobs—approximately 10% of its total workforce in Europe—and plans to consolidate two production lines into one at its Sunderland plant in the United Kingdom, which is Nissan’s only complete vehicle plant in Europe.

This content was produced with the assistance of AI translation services.