OTTAWA — Prime Minister Mark Carney admitted the auto sector in Canada is facing headwinds, after a report by a Japanese outlet confirmed Honda will be pulling out of a $15-billion electric vehicle plant in Ontario.
“Obviously there’s challenges with the U.S. tariffs, unjustified tariffs in the auto sector,” said Carney, before a caucus meeting on Wednesday.
“We continue to work with companies in the sector, helping them reposition, reinvest, supporting workers there, we’ll continue to do what’s necessary, including getting the right deal that’s in Canada’s interest,” he added.
On Tuesday, Nikkei Asia reported the Japanese carmaker has decided to pull out of the plant in Canada due to waning demand for EVs in the U.S. and a pivot in its strategy towards hybrid models.
The plant in Alliston, Ont., was slated to become operational in 2028 and would have produced up to 240,000 EVs annually.
Last May, Honda announced a delay in its plans for the plant, noting that the company would look at where the EV market is headed.
In a statement, Honda Canada spokesperson Ken Chiu said the company has not announced anything.
“The content of the article was not released by Honda, and we have nothing to report at this time,” he said, in relation to the initial Nikkei news report.
The federal government announced its auto strategy in February, which included an EV incentives program to build a stronger Canadian domestic consumer market.
However, the competitiveness of Canada’s auto sector remains in its integration with the United States under the Canada-United-States-Mexico-Agreement (CUSMA), which is under significant strain with U.S. tariffs on Canadian autos, aluminum, steel and copper.
Carney said last month that any CUSMA deal with the U.S. “will take some time.”
Conservative Leader Pierre Poilievre said Carney came into office a year ago, with promises to make a deal, but no such deal on autos has materialized. Poilievre also took aim at Carney’s strategy to diversify away from the U.S. market.
“What we’re seeing from Mark Carney is not a plan, but an illusion,” said Poilievre, during a press conference in Ottawa. “He claims that we’re going to replace 83 per cent of our automotive sales to the U.S., by making electric vehicles that people don’t want to buy, that we don’t make, and selling them into markets where we don’t sell, and where they’re already being purchased from elsewhere at half the price.”
In the meantime, last month U.S. President Donald Trump announced changes to tariffs on metal imports, which means a 25 per-cent tariff is now applied on the whole product, versus what was the case before where just the percentage of steel, aluminum and copper content within a product was tariffed. This has added more strain to Canadian industries exporting to the United States.
In response, Industry Minister Melanie Joly this week announced $1.5 billion in funding for industries hit by the metal tariffs.
Gabrielle Landry, a spokesperson for Joly’s office, said U.S. policies are putting real pressure on automakers, which are prompting delays on investments for EVs and battery projects.
“That is why our government launched our Canadian Auto Strategy in February,” said Landry, in an emailed statement. “This strategy is focused on transforming the sector to seize the opportunities presented by electrification by attracting investment, supporting domestic production, making EVs more affordable and accessible, and protecting Canadian workers and businesses.”
Landry added that Joly’s office remains in contact with Honda.
Conservative International Trade Critic Adam Chambers told reporters on Wednesday that Honda’s decision is an “indictment of the government’s auto policy.”
“They bet very big on electric vehicles, they put subsidies in the window to lure companies to suggest that they would build electric vehicles here,” said Chambers, on his way into a caucus meeting. “That ended up forcing or causing some of the OEMs (Original Equipment Manufacturers) here to move traditional vehicle production outside of Canada to the U.S. to make room to make electric vehicles here.”
Chambers said now the market has changed and instead of rethinking their entire policy, the government is doubling down on its strategy.
“If we don’t have any access to the U.S. market, we do not have an industry,” he added.
The prime minister is due to make an announcement in Mirabel, Que., related to the aerospace industry later today at 2:30 p.m. ET.
More to come.
National Post
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