The Honda Motor Company announced today it will make the largest auto investment in Canadian history.

The Japanese automaker plans to open four new manufacturing plants in Ontario, to assemble electric vehicles and make batteries for them.

Honda is set to build an electric vehicle battery plant next to its Alliston, Ont., assembly plant, which it is retooling to produce fully electric vehicles, all part of a $15-billion project that is expected to include up to $5 billion in public money.

The plants are expected to create 1,000 jobs on top of retaining the existing 4,200 jobs at the assembly plant.

The deal does not involve production subsidies, which were used to woo two other automakers to build battery plants in Ontario instead of the United States with its incentives under the Inflation Reduction Act.

On Thursday at the Honda plant in Alliston, Ont. Prime Minister Justin Trudeau and Premier Doug Ford joined Honda for the announcement.

The federal and provincial governments are expected to support around $5 billion of the project through tax credits and indirect incentives.

The federal government is expected to give the Japanese automaker 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.

READ MORE: Hamilton MPP Sarah Jama asked to leave Ontario legislature over keffiyeh

The $15-billion project includes the retooled plant, an electric vehicle battery plant nearby, as well as two key battery parts facilities – for cathodes and separators – located elsewhere in Ontario.

The four new plants are expected to create Canada’s first electric vehicle supply chain, from creating the batteries and materials to assembling the cars.

However, it is still unclear what will happen to the current plant and its 4,200 workers.

The union representing the auto workers, UNIFOR, is calling on the government to ensure workers are supported through the transition to electric production.

“These investments will create well over a thousand well-paying jobs, as well as many construction jobs, and of course jobs all across Ontario and the country for auto part suppliers,” said Prime Minister Trudeau.

“It’s incumbent on governments who are making these investments to ensure that the jobs on the other end are good paying jobs, are union jobs. Because in our opinion that is the best way to ensure that the jobs remain as stable over a long period of time and making sure that workers are protected through this transition that we’re going through,” said Lana Payne the UNIFOR National President.

The Honda facility will be the third electric vehicle battery plant in Ontario, following in the footsteps of Volkswagen in St. Thomas and a Stellantis LG plant in Windsor.

The federal conservatives were quick to oppose the deal, saying there is no promise on how many jobs will be given to Ontarians instead of foreign workers.

Honda says the new Ontario factories should be ready by 2028 and can produce 240,000 vehicles a year when fully scaled.

READ MORE: Hamilton passes vacant unit tax bylaw

The deal comes after years of meetings and discussions between Honda executives and the Ontario government, which began after the last big government announcement at Honda’s Alliston facility.

Trudeau, Ford and Honda executives were on hand in Mar. 2022 when the Japanese automaker announced hybrid production at the plant, with $131.6 million in assistance from each of the two levels of government.

That kickstarted conversations about a larger potential investment into electric vehicles, and negotiations began that summer.

In the midst of those negotiations, in May of 2023, Stellantis and LG stopped construction on their $5-billion electric vehicle battery facility, as they pressed the federal government to match what the United States would offer under its then-new Inflation Reduction Act.

They ultimately reached a deal with Canada and Ontario that will see the companies receive performance incentives of up to $15 billion over about 10 years.

The offer was also extended to Volkswagen for its electric vehicle battery facility and that deal could see up to $13 billion in incentives.

Deputy Prime Minister Chrystia Freeland has said large production incentives were necessary for both Volkswagen and Stellantis to help establish Canada’s green economy and ensure the companies were not lured away to the United States by the benefits under the IRA.

The federal government later indicated that tap was turned off, and Fedeli said in an interview that it didn’t derail the negotiations with Honda.

READ MORE: Fire in Hamilton’s east end causes $100,000 in damages

“Production incentives were meant to match the American production incentives, but it’s just far too much to continue with on an ongoing basis,” he said.

“I think they were good to get started, but the rest of the industry now is starting to realize, right across North America, that you need to be where you really should be for the talent, clean energy and critical minerals.”

The other two battery plants in the works have also started to draw other parts of the supply chain, Fedeli said, which became another part of the pitch for Honda – and perhaps others.

“We wanted EV manufacturers, we wanted a couple of battery manufacturers, and now we’re filling in the major supply chain: cathode, anode, separator, electrolyte, copper foil, lithium hydroxide, those six major components,” he said.

“We still have some room in our incentive packages for that line of six. After that, the incentive is: we brought you a customer. We brought you a battery maker … You have to go and do your deal with them. You have enough incentive to come here.”

Made with files by The Canadian Press first published April 25, 2024.