The biggest and broadest battery-plant deal that Canada has struck so far also looks like something of a steal.
On April 25, Honda Motor Co. said it would spend $15 billion to build four plants in Ontario, including a battery-cell manufacturing site at its campus in Alliston, Ont., which currently builds the Civic and the CR-V.
Taxpayers will kick in up to $5 billion for the project, which includes building out a battery supply chain.
While that’s hardly chump change, it’s a far cry from the close to $40 billion the federal and two provincial governments committed to secure the three previous battery plants planned for Ontario and Quebec. For those deals, Ottawa matched production tax credits offered in the U.S. Inflation Reduction Act. This will give the battery manufacturers a US $35 (Cdn $47) tax credit for each kilowatt-hour of cells produced through 2030 and a declining portion of that sum until 2033. The price tag adds up quickly, with each plant slated to build tens of millions of cells per year.
Honda, on the other hand, will get a combined $5 billion from the federal and Ontario governments. Along with its 36 gigawatt-hour cell plant, Honda will build a new EV assembly facility and be a joint-venture partner in at least two battery-component plants in Ontario.
In short, it’s less government money for a broader corporate commitment.
HOW MANY JOBS?
One drawback is less clarity on the number of Canadian jobs the Honda investment will create.
The automaker said the project would add no less than 1,000 jobs in Alliston, but how the company plans to operate both a new battery plant and new assembly plant with a workforce that size is unclear. By comparison, the three other battery plants planned for Canada are expected to employ between 2,500 and 3,000 workers each.
Honda is either being extraordinarily cautious in its job-creation commitment, or its long-term plans are to shuffle some of its existing 4,200 workers in Alliston into its new plants, thus limiting new hires.
But even accounting for just 1,000 added jobs in Alliston, the economic ripple effects will be huge, said Brendan Sweeney, managing director of the Trillium Network for Advanced Manufacturing.
“By the early 2030s, especially if Canada has a couple of mines online to feed the [battery] materials plant, the economic multiplier associated with Honda’s facility will be the highest economic multiplier associated with any production site that we’ve seen in Ontario yet.”
Initial numbers from the Trillium Network, a nonprofit organization that promotes Ontario’s manufacturing sector, indicate that 1,000 EV assembly jobs in Alliston will translate into 7,000 to 10,000 jobs beyond the plant. The more local sourcing the company does, the higher the tally will go.
And Honda has been clear about its intention to build a vertically integrated supply chain as close to the plant as possible.
If history is any indication, the automaker is also a safe bet. Canada’s wider auto manufacturing sector has hollowed out over the nearly 40 years Honda has operated in Ontario, but production in Alliston has only increased. Public spending of $5 billion is a small price to pay if it secures another 40 years of growth at Honda Canada.
