Volkswacht Bodensee - Honda suspends plans for new electric vehicle plant in Canada

Canada had hoped to become a global EV production powerhouse, inking massive government-backed deals with leading automakers like Honda and Germany's Volkswagen -- but those ambitions are fraying.

Demand for EVs has proven softer than expected in some markets, and sales have been hurt by US President Donald Trump's decision to scrap federal government tax breaks for electric vehicle sales.

Honda said in a statement its decision was driven by "evolving business conditions, a change in external resource strategy and shifting customer demand."

The company had planned to expand its operations in Alliston, Ontario, about 90 kilometers north of Toronto, where it has been producing conventional vehicles for decades.

When the plan was announced two years ago, Canadian officials valued the project at roughly C$15 billion ($11 billion).

Canada has pitched itself as an ideal location for EV battery production, arguing it has huge reserves of the critical minerals needed for advanced battery technology and an abundance of skilled auto workers.

But multiple projects have been delayed or suspended as automakers have adjusted their plans to ramp up EV production.

Honda announced in March that it was cancelling the launch and development of certain EV models in the United States, blaming a "government policy shift" by the Trump administration.

Canada's auto industry has also been hit uniquely hard by Trump's tariffs, given the deep integration of the North American auto sector.

D.Schaer--VB