Carney says 'challenges' face auto sector after Honda pulls out of EV plant in Ontario

OTTAWA — 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.

“Obviously there’s challenges with the U.S. tariffs, unjustified tariffs in the auto sector,” said Carney, before a caucus meeting on Wednesday.

“We continue to work with companies in the sector, helping them reposition, reinvest, supporting workers there, we’ll continue to do what’s necessary, including getting the right deal that’s in Canada’s interest,” he added.

On Tuesday, Nikkei Asia reported the Japanese carmaker 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.

The plant in Alliston, Ont., was supposed to become operational in 2028 and would have produced up to 240,000 EVs annually.

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.

The federal government announced its auto strategy in February, which included an EV incentives program to build a stronger Canadian domestic consumer market.

However, the competitiveness of Canada’s 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.

Carney said last month that any CUSMA deal with the U.S. “will take some time.”

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.

In response, Industry Minister Melanie Joly this week announced $1.5 billion in funding for industries hit by the metal tariffs.

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.

More to come.

National Post

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