LILLEY: Tariffs not to blame for Honda's decision to axe EV plant in Alliston
· Toronto Sun
The bad news is that Honda isn’t expanding its operations in Alliston to build an electric vehicle plant . The good news is that no government money has been handed over despite a promise of up to $5 billion when the project was announced two years ago.
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The announcement on April 25, 2024, promised a $15-billion investment from Honda for a new EV assembly line and a battery plant. The federal government promised up to $2.5 billion in production tax credits and the provincial government promised up to another $2.5 billion in support.
“There is no money that has been released to Honda whatsoever, period,” said Ontario’s Economic Development Minister Vic Fedeli when asked about the issue on Wednesday.
On Parliament Hill, Prime Minister Mark Carney responded to the news by blaming U.S. President Donald Trump and his tariffs .
“There’s challenges with the U.S. tariffs, unjustified tariffs in the auto sector. We continue to work with companies in the sector, helping them reposition, reinvest, supporting workers there,” Carney said.
U.S. subsidies, regulations were cut
You can blame Trump for Honda’s decision, but this has nothing to do with tariffs and everything to do with consumers not wanting EVs.
The Joe Biden administration had offered consumers up to $7,500 per vehicle to buy EVs. They had also passed tailpipe emissions standards designed to force more consumers into EVs in the coming years.
Shortly after he was elected, Trump eliminated the subsidy and the tailpipe emissions regulations. He then went a step further and revoked California’s ability to require all new vehicles to be zero emission by 2035.
“I’m all for electric. If you want to buy electric, you can buy electric,” Trump said in June 2025 when repealing California’s mandate. “You should be given the option. Buy the electric car. Buy a gasoline-powered car. Buy a hybrid.”
Those moves pulled the rug out from underneath the EV market across North America.
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North American sales have plummeted
Electric vehicle sales had been climbing in the U.S. and in Canada, but sales plummet every time that subsidies go away. In fact, just before the expiration of the U.S. subsidy last year, battery electric vehicles made up 10% of new cars sold but plummeted to about 5% after the subsidy was taken away.
In Canada, a similar thing happened.
In September 2024, there were 30,318 zero-emission vehicles – mostly battery electric – sold in Canada, which represented 18% of all new cars sold that month. By the following February, EV sales amounted to just 8,578 units or 6.8% of all new cars sold.
The EV market in North America doesn’t survive at this point without subsidies and it will be the same way when Carney’s new deal with China sees up to 49,000 Chinese-made electric vehicles into Canada. China subsidizes its EV manufacturing extensively, especially for the export market.
Lack of new investments concerning
Of note, Honda is still moving forward with some EV production; they announced earlier this year that a $1-billion investment in Ohio will allow them to produce electric, hybrid and gas-powered cars at the same plant. Other automakers including Toyota, Hyundai, Ford, Stellantis and GM have also announced major investments in new U.S. production over the last year.
While Honda’s decision not to go ahead with its EV plans in Alliston isn’t related to Trump’s tariffs, our lack of new auto investment in Canada of late has everything to do with the tariffs. Until the uncertainty of the tariffs is removed, we aren’t going to see any significant auto investment in this country.
That’s why getting a deal, rather than dragging his feet, is imperative for Carney.
Sadly, Carney is showing more interest in moving Canada closer to Europe , where they won’t buy our cars, while promoting a rupture with the U.S.