Honda Motor is considering an indefinite freeze on its planned EV and battery manufacturing facilities in Ontario, Canada, as slowing US electric vehicle demand prompts a comprehensive review of its North American strategy, according to The Japan Times.
Shift in Strategy and Timeline
The automaker is shifting more focus toward hybrid vehicles while reassessing future EV investment plans in the region. Honda had originally planned to start operations at the Ontario facilities in 2028, but announced in May 2025 that it would delay the project by approximately two years. The project was expected to cost about 15 billion Canadian dollars. Honda had already purchased land and made other preparations for the facility.
Broader North American EV Retreat
Honda’s potential freeze in Canada follows a wider retreat from EV production across North America. Last week, Honda announced it would scrap three electric vehicles previously planned for Ohio production: the Honda 0 SUV, the Honda 0 Saloon, and the Acura RSX (a premium sport utility vehicle from Honda’s luxury brand Acura). Concurrent with these cancellations, Honda booked a US$15.7 billion restructuring charge and now expects its first annual loss in approximately 70 years.
Similarly, Nissan last week dropped plans to build EVs at a US assembly plant, reflecting broader strategy shifts in the automotive sector.
US Policy Changes Drive Retreat
The shift in EV investment comes after the US government removed key EV incentives on September 30. The removal included the elimination of up to US$7,500 tax credits for new electric vehicles and the addition of a US$250 yearly fee for electric vehicles. These policy changes have prompted widespread reassessment across the industry: companies had canceled US$22 billion in previously announced EV or battery manufacturing projects in the United States in 2025.
Battery Capacity Redirected to Grid Storage
Slower EV demand has left automakers and battery manufacturers with excess capacity. Rather than idle assets, some are redirecting battery production toward the stationary energy storage market, which stores electricity for later use on the power grid.
Ford provides a recent example, announcing it would convert existing US battery production capacity in Glendale, Kentucky, toward battery energy storage systems after ending production of the F-150 Lightning electric truck. Demand from the energy storage sector is driving this shift: based on UBS data, lithium demand for energy storage is projected to rise 55% in 2026.
The redirection is also reshaping logistics and supply chains. Providers now need to manage larger, more complex systems for utility projects operated by power companies, rather than handling high-frequency automotive parts.
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