Slowing EV demand and US policy shift away from electric cars pushes Honda to rethink its North America strategy
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- Honda has put a hold on plans to develop a new EV plant in Ontario.
- Plans were announced in 2024, but then delayed by two years in 2025.
- Honda recently scrapped three new EVs due to launch in North America.
Honda’s electric future in North America just took its second major hit in as many months. The company is now hitting pause on plans for a massive EV and battery plant in Canada, and it might not restart anytime soon.
The project, originally announced in 2024, was going to be huge, with $15 billion CAD ($11 bn USD) earmarked for a new factory in Alliston, Ontario. But Honda has decided to shelve the plan indefinitely while it reassesses the market, Nikkei Asia reports.
Related: Honda’s $15.9 Billion EV Disaster Just Delayed The Next Accord, Odyssey, And MDX
It’s not hard to see why the plans collapsed. EV demand in the US isn’t where Honda expected it to be, and that’s forcing a rethink. Instead of going all in on electric, the company is doubling down on hybrids, which are selling strongly right now.
Policy changes haven’t helped either. The removal of federal EV incentives in the US has made electric cars more expensive overnight, while relaxed efficiency rules have reduced the urgency for automakers to push EVs hard. There’s also the issue of tariffs and trade uncertainty between the US and Canada, which adds another layer of risk to any long-term investment.
“American tariffs and changes to US domestic policies are creating real pressures for automakers, prompting some to delay or scale back investments in electric vehicle and battery projects,” Industry Minister Melanie Joly told Canada’s CTV News.
Already Delayed
Honda had already delayed the Alliston EV project once, pushing the timeline for the car plant and related battery plant back by two years in May of 2025, despite having already acquired the land and locked in financial help from Canada. Now it’s taking things further by putting everything on ice while it watches how the market evolves, though it will still build the Civic and CR-V at its existing Alliston plant that was opened in 1986.
Multiple Future EVs Scrapped
The shift in powertrain philosophy is already showing up in Honda’s new EV product plans. The company is winding down the Prologue EV, which it co-developed with GM, and earlier this year scrapped three exciting new Honda and Acura electric cars and SUVs destined for North American roads, even though they were in the final stages of development. Not long after that, Honda and Sony confirmed they were abandoning their plans to launch EVs under the Afeela brand.
Instead of EVs, Honda will focus on hybrids in North America, which are gaining popularity with buyers, and extend the life of existing models to save cash. That doesn’t mean Honda is abandoning EVs completely. It still has flexible production lines in Ohio that can build gas, hybrid, or electric models depending on demand, having spent $1 billion to upgrade the site. But for a while at least, fully electric models won’t be part of Honda’s future in the US or Canada.
