Honda to spend over $1 billion to upgrade Ontario factories

(Reuters) -Honda Motor Co’s Canadian manufacturing arm will invest C$1.38 billion ($1.09 billion) over six years to upgrade its plants in Ontario as the automaker gears up to make its new hybrid SUV for the North American market.

The investment would make the facility the biggest plant in the region for the 2023 CR-V Hybrid crossover and includes equal grants of C$131.6 million from the governments of Canada and Ontario, Honda of Canada Mfg said on Wednesday.

Honda’s announcement comes at a time when automakers globally have sharpened their focus on producing environmentally friendly vehicles in response to rising demand.

Prime Minister Justin Trudeau’s government sees the auto sector as a key part of its efforts to lower national carbon footprint.

Rich in key materials for electric vehicle battery production – including lithium, graphite, cobalt and nickel – Canada is trying to woo battery makers to safeguard the future of its manufacturing heartland in Ontario.

“We’re positioning Canada as a leader in low and zero emission vehicle manufacturing,” Trudeau said at Honda’s manufacturing plant in Ontario.

The province is close to U.S. automakers in Michigan and Ohio, and General Motors Co, Ford Motor Co and Stellantis NV have all announced plans to make electric vehicles there.

As Canada’s economy recovers from the impact of the COVID-19 pandemic, it must ensure that the “recovery is sustainable, and it creates good jobs,” Trudeau said.

Honda said Ontario plant upgrades would secure thousands of jobs in Canada.

The investment would also bring the Japanese automaker closer to meeting its goal of making electric and fuel cell vehicles account for 100% of all sales by 2040.

Having started production in 1986, Honda of Canada Mfg has the capacity to make more than 400,000 vehicles and 190,000 engines annually.

($1 = 1.2701 Canadian dollars)

(Reporting by Aishwarya Nair and Ismail Shakil in Bengaluru and Steve Scherer in Ottawa, Editing by Aditya Soni and Tomasz Janowski)