Honda has postponed its ambitious $11 billion (C$15 billion) electric vehicle (EV) production hub in Ontario, Canada, for at least two years, citing U.S. tariffs and a slower-than-expected EV market. The decision, announced by CEO Toshihiro Mibe on May 13, 2025, reflects the automaker’s cautious approach to navigating economic and regulatory challenges, according to Automotive News Canada.

Economic Pressures from U.S. Tariffs

U.S. tariffs, implemented by the Trump administration, are projected to cut Honda’s operating profit by $4.34 billion (¥650 billion) in the fiscal year ending March 31, 2026. This financial hit, described as the “minimum impact” by Mibe, contributes to a forecasted 59% drop in operating profit to $3.34 billion (¥500 billion).

“This is the minimum tariff impact, but it will continue to change as time goes by,” Mibe stated during the fiscal-year financial results announcement.

The tariffs target vehicles and parts from Canada, Mexico, and Japan, which supply about one-third of Honda’s U.S. vehicles. To mitigate this, Honda is shifting some CR-V crossover production from its Alliston, Ontario, plant to U.S. facilities in Ohio and Indiana.

Slowing EV Demand Reshapes Strategy

Honda’s decision to delay the Ontario EV hub, originally slated to produce 240,000 vehicles annually by 2028, stems from a global slowdown in EV demand.

“The growth of the electric vehicle market has slowed more than initially expected, making it difficult to anticipate further progress,” Mibe said.

The hub, which includes a retooled assembly plant, a battery plant, and two battery parts facilities, was expected to create 1,000 new jobs while retaining 4,200 existing positions.

Despite the delay, Honda Canada emphasized stability, stating, “Honda continually looks for ways to very carefully optimize production to meet customer needs and market conditions.”

No government funds from Canada or Ontario, which had pledged $1.84 billion (C$2.5 billion) each, have been disbursed, as confirmed by Ontario Minister of Economic Development Vic Fedeli.

Production Shifts and Operational Continuity

Honda’s Alliston plant, which produced 206,455 Civics and 214,095 CR-Vs in 2024, remains a cornerstone of its North American operations. The facility, also home to a 2.0-liter engine plant, is being retooled for next-generation EVs. While CR-V production for the U.S. market will partially shift south, Honda Canada assured that “there are no plans to decrease overall [Honda Canada Manufacturing] production volume or employment.” Ontario’s Fedeli echoed this, noting Honda’s commitment to maintaining current employment and production levels in Alliston.

Industry Trends and Consumer Impact

The postponement highlights broader challenges in the EV sector, where automakers face high production costs and fluctuating consumer demand. Honda’s localized North American operations, with only 5,379 vehicles imported from Japan to the U.S. in 2024, provide some insulation against tariffs. However, the delay in Canada could slow the rollout of affordable EVs, potentially affecting consumers eager for Honda’s next-generation electric models. The company’s countermeasures, such as relocating hybrid Civic production to Indiana, demonstrate a flexible approach to maintaining supply chains.

Looking Ahead

Honda plans to provide updated investment details at a business briefing on May 20, 2025. For EV enthusiasts, the delay underscores the complex interplay of policy, economics, and market dynamics shaping the transition to electric mobility. While Honda remains committed to its Ontario operations, the pause in its EV hub raises questions about the pace of North America’s electrification goals.

Photos courtesy of Honda