Wednesday, May 22, 2024

Honda is getting $5 billion to build EV battery and assembly plants

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The planned addition of $5 billion in government funding is expected to retain 4200 jobs at the plant as well as create 1000 jobs at the two main plants

Alliston, Ontario is going to build an electric vehicle battery plant near the addition plant. The $1,500-crore project will build a supply chain in the province for the Japanese automaker to produce fully electric vehicles.

The proposed addition of $5 billion in government funding is expected to retain 4,200 jobs at the plant as well as create 1,000 jobs at the two main plants. When fully operational in 2028, the plant will produce 240,000 vehicles a year.

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Jobs are at the heart of the deal, Prime Minister Justin Trudeau said. At a press conference on April 25 to detail the project, he said the project is aimed at creating green products for Canadians that Canadians will depend on in the future. But primarily it is an investment in workers and communities. They will work on the construction of the plant.

The agreement does not include any subsidy on production. What the two automakers got was to build a battery plant in Ontario instead of the United States. But the federal government is giving the Japanese automaker about $2.5 billion in tax credits.
In her recent budget announcement, Finance Minister Chrystia Freeland proposed a 10 per cent electric vehicle supply chain investment tax credit on the cost of manufacturing electric vehicles, manufacturing batteries and manufacturing cathode active materials in Canada. This is in addition to the existing 30 percent clean technology manufacturing investment tax credit on investments in new machinery and equipment.

Ontario has agreed to pay $2.5 billion directly and indirectly. Direct funds include capital expenditure and indirect funds include site servicing costs.

Trudeau argued for government funding for the project. He said countries are competing with each other to invest in green manufacturing, and Honda’s project will benefit Canada’s economy and communities.

He said, it is not only job creation. It will employ 1,000 new people, contributing to the ecosystem that engages Canada’s suppliers, communities, future generations. Yes, you will find many politicians here, who will sit back and say ‘no’, ‘no’, ‘no’. At any rate we have balanced the budget. It would even say that this means no investment in Canadian workers and futures. I think they are wrong.

Ontario Premier Doug Ford said Honda’s investment is a generational commitment. He said, what price are you paying for this? You don’t have to pay anything for it. Because we are investing in people. The money stays here in Ontario. It is not going abroad. It’s not even going to the US. It will stay in Ontario for decades, generations.

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