JAPANESE auto giant Honda will open an electric vehicle (EV) plant in eastern Canada, a Canadian government source familiar with the multibillion-dollar project told AFP on Monday (Apr 22).

The federal government as well as the province of Ontario, where the plant will be built, will both provide some financial incentives for the deal, according to the source, who spoke on condition of anonymity.

The official announcement is due on Thursday, though Ontario premier Doug Ford hinted at the deal on Monday.

“This week, we have landed a new deal. It will be the largest deal in Canadian history. It will be double the size of Volkswagen,” he said, referring to a battery plant announced last year, for which the German automaker pledged C$7 billion (US$7 billion) in investment.

Canada in recent years has been positioning itself as an attractive destination for EV investment, touting tax incentives, renewable energy access and its rare mineral deposits.

The Honda plant, to be built an hour outside Toronto, in Alliston, will also produce EV batteries, joining existing Volkswagen and Stellantis battery plants.

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In January, when news of the deal first bubbled up in the Japanese press, the Nikkei newspaper estimated it would be worth C$14 billion – numbers backed up by Canadian officials recently.

In the federal budget announced last week, Prime Minister Justin Trudeau’s government introduced a new business tax credit, granting companies a 10 per cent rebate on construction costs for new buildings used in key segments of the EV supply chain.

Canada’s strategy follows that of the neighbouring United States, whose Inflation Reduction Act has provided a host of incentives for green industry.

Honda hopes to sell only zero-emission vehicles by 2040, with a goal of going carbon-neutral in its own operations by 2050. AFP