OTTAWA \u2014 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.<\/p>\n
\u201cObviously there\u2019s challenges with the U.S. tariffs, unjustified tariffs in the auto sector,\u201d said Carney, before a caucus meeting on Wednesday.<\/p>\n
\u201cWe continue to work with companies in the sector, helping them reposition, reinvest, supporting workers there, we\u2019ll continue to do what\u2019s necessary, including getting the right deal that\u2019s in Canada\u2019s interest,\u201d he added.<\/p>\n
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.<\/p>\n
The plant in Alliston, Ont., was slated to become operational in 2028 and would have produced up to 240,000 EVs annually.<\/p>\n
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.<\/p>\n
In a statement, Honda Canada spokesperson Ken Chiu said the company has not announced anything.<\/p>\n
\u201cThe content of the article was not released by Honda, and we have nothing to report at this time,\u201d he said, in relation to the initial Nikkei news report.\u00a0<\/p>\n
The federal government announced its auto strategy in February, which included an EV incentives program to build a stronger Canadian domestic consumer market.<\/p>\n
However, the competitiveness of Canada\u2019s 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.<\/p>\n
Carney said last month that any CUSMA deal with the U.S. \u201cwill take some time.\u201d<\/p>\n
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\u2019s strategy to diversify away from the U.S. market.<\/p>\n
\u201cWhat we\u2019re seeing from Mark Carney is not a plan, but an illusion,\u201d said Poilievre, during a press conference in Ottawa. \u201cHe claims that we\u2019re going to replace 83 per cent of our automotive sales to the U.S., by making electric vehicles that people don\u2019t want to buy, that we don\u2019t make, and selling them into markets where we don\u2019t sell, and where they\u2019re already being purchased from elsewhere at half the price.\u201d<\/p>\n
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.<\/p>\n
In response, Industry Minister Melanie Joly this week announced $1.5 billion in funding for industries hit by the metal tariffs.<\/p>\n
Gabrielle Landry, a spokesperson for Joly\u2019s office, said U.S. policies are putting real pressure on automakers, which are prompting delays on investments for EVs and battery projects.<\/p>\n
\u201cThat is why our government launched our Canadian Auto Strategy in February,\u201d said Landry, in an emailed statement. \u201cThis 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.\u201d<\/p>\n
Landry added that Joly\u2019s office remains in contact with Honda.<\/p>\n
Conservative International Trade Critic Adam Chambers told reporters on Wednesday that Honda\u2019s decision is an \u201cindictment of the government\u2019s auto policy.\u201d<\/p>\n
\u201cThey bet very big on electric vehicles, they put subsidies in the window to lure companies to suggest that they would build electric vehicles here,\u201d said Chambers, on his way into a caucus meeting. \u201cThat 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.\u201d<\/p>\n
Chambers said now the market has changed and instead of rethinking their entire policy, the government is doubling down on its strategy.<\/p>\n
\u201cIf we don\u2019t have any access to the U.S. market, we do not have an industry,\u201d he added.<\/p>\n
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.<\/p>\n
More to come.<\/p>\n
National Post<\/p>\n
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