Honda’s recent decision to pause $15 billion in EV-related real estate investments in Alliston, Ont., for two years stemmed from a global strategy shift, says the company’s CEO.

The Japanese automaker is shifting gears in its electrification strategy, placing greater emphasis on hybrid-electric vehicles (HEVs) while putting its Alliston plant expansion project on hold.

“We are reassessing our EV strategy and road map, including the plans for the product lineup and the timing of relevant investments, including the one to build a comprehensive EV value chain in Canada,” said CEO Toshihiro Mibe during a business briefing this week.

Mibe said Honda is reducing its global EV investments to $67.5 billion from $96.4 billion in conjunction with the decision on the Alliston plant and overall strategy shift.

Mibe said Honda made the move because the U.S. and European governments are relaxing environmental regulations that have sparked widespread EV adoption.

“As a result, the expansion of the EV market has fallen behind the expected projection,” said Mibe in his speech. “In addition, recent developments in trade policies of various countries are making our business environment increasingly uncertain.”

Honda had projected a 30% increase in EV sales by 2030.

“On the other hand, current market demand for our current EV models is high,” said Mibe. “Therefore, we will position our HEVs, mostly next-generation HEV models which we will introduce in 2027 onward, as a group of products that will play a key role during the transition period toward the popularization of EVs.”

The Alliston project, first announced in April 2024, was to include an EV assembly plant, battery-cell manufacturing, active cathode material facilities, and potentially a battery-recycling operation. Production was originally slated to begin in 2028, with an eventual annual capacity of 240,000 EVs.

Despite the delay, Honda insists the project has not been cancelled and remains “a central focus” of its long-term strategy.

The initiative had received federal and provincial backing, including tax credits expected to offset up to $5 billion in direct and indirect costs.

Mibe reaffirmed that Honda is still committed to completing the Canadian project.

Honda has been manufacturing vehicles in Alliston since 1986.

Pictured: Honda vehicle manufacturing plant in Alliston, Ont.

Photo: Honda

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