April 25, 2024, 11:11 AM

Market Chatter: Federal Government and Ontario Announce $15 Billion Honda EV Deal

The governments of Canada and Ontario have announced a multibillion-dollar deal that will see Honda Motor Co. expand its Alliston, Ont. plant to manufacture electric vehicles and host a large EV battery plant, adding 1,000 more jobs in what the two governments say is the largest ever single investment in Canada's auto sector, The Globe and Mail is reporting Thursday.

It noted the deal with the Japanese automaker follows other major announcements of new electric vehicle plants and battery factories -- with multi-billion-dollar government help -- in Windsor, Ont., where auto giant Stellantis and South Korea's LG Battery Solution are building a massive facility, and in St. Thomas, Ont., where Volkswagen was lured to build a so-called gigafactory battery plant.

The deal was unveiled Thursday morning in Alliston by Prime Minister Justin Trudeau and Ontario Premier Doug Ford.

According to the report, the federal government is expected to give Honda around $2.5 billion through tax credits for clean technology manufacturing and electric vehicle supply chain investments. Ontario has committed to providing up to $2.5 billion directly -- such as for capital costs -- and indirectly, such as covering site servicing costs.

In an interview before the announcement, Ontario's Minister of Economic Development, Job Creation and Trade, Vic Fedeli, said the deal would see the companies involved and governments put in $15-billion in total for the expansion -- more than double the $7-billion in capital costs earmarked for Volkswagen's plant.

But he said unlike the previous deals, the subsidies involved are not aimed at matching the huge incentives offered by the U.S. in its Inflation Reduction Act.

The report noted Honda is receiving tax credits from Ottawa, and he said "direct and indirect incentives" from Ontario, but Fedeli would not reveal the financial details. Fedeli said Honda was attracted to Ontario by its skilled workforce, its comparatively clean energy grid, and the fact that the critical minerals needed in EV batteries can be found in the province.

Fedeli said the plan would see 240,000 vehicles a year manufactured at the site, and preserve its existing 4,200 jobs while adding another 1,000. The planned EV battery assembly plant would be about a third of the size of the massive battery factory the governments were able to attract Volkswagen to build in St. Thomas, Ont.

He said the deal also involves South Korea's POSCO Future M Co., Ltd and Japan's Asahi Kasei Corp., both of whom are to build plants to build EV battery components -- cathodes and separators -- in other cities in Ontario. Those details, he said, would be announced at a later date.

(Market Chatter news is derived from conversations with market professionals globally, and/or from other media sources. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

(Market Chatter news is derived from conversations with market professionals globally, and/or from other media sources. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

http://www.mtnewswires.com
Copyright © 2024 MT Newswires. All rights reserved. MT Newswires does not provide investment advice. Unauthorized reproduction is strictly prohibited.

Market data, news, and company information provided by Interactive Data. Copyright © 2016. Terms of use. Earnings estimates and analyst ratings provided by Zacks. News provided by The Associated Press and MT Newswires, a division of MidnightTrader, Inc. Hemscott equity data provided by Morningstar, Inc. Analyst reports provided by Argus Research Company and Marketgrader.com. Share details provided by EDGAR Online. Economic events copyright 1999-2016 Econoday, Inc. Earnings events provided by Wall Street Horizon. © 2016 Wall Street Horizon, Inc.

« Previous page