COMMENTARY: Canada’s EV Dreams Remain at Odds With Reality

By Annika Segelhorst and Elmira Aliakbari

In 2024, Honda announced plans to build a $15 billion electric vehicle (EV) manufacturing hub in Alliston, Ontario, touted as the largest-ever manufacturing investment in Canada’s history. Both the Trudeau government and the Ford government committed a combined $5 billion for the project.

But in 2025, Honda announced that the project would be delayed, amid weaker prospects for EV demand and U.S. tariff threats. Fast-forward to May 2026, and Honda is shelving the $15 billion project altogether. Honda’s retreat from EVs echoes a broader trend—automakers have slowed down or walked away from plans to rapidly expand EV production in Canada, despite significant subsidies for the industry, reflecting downgraded expectations about consumer appetites for electric cars in North America.

For years, federal and provincial governments have eagerly committed tens of billions in taxpayer funds on a bet that Canada could become a global leader in EVs and bring prosperity and jobs to the auto manufacturing heartland in Ontario and Quebec. Yet each new instance of an automaker scaling back EV and battery production reveals the same miscalculations that underpin the government’s EV strategy.

In 2022, the Trudeau government introduced the EV sales mandate, which the Carney government scrapped in February 2026, replacing it with a new stricter emission standard that will, in practice, mean that three-quarters of all new cars sold in Canada will be EVs by 2035 and 90 per cent by 2040. In other words, despite scrapping the sales mandate, not much has changed. The government has also resurrected the EV rebate program, offering up to $5,000 for new battery-electric and fuel-cell EV purchases.

But even generous government subsidies can’t substitute for real consumer demand. According to Statistics Canada, EVs and plug-in hybrids comprised only 8.7 per cent of new vehicle sales in 2025. In the United States, that share was 7.8 per cent.

Several prominent government-subsidized EV projects have already faced delays, cancellations or cutbacks as automakers recognize that Canadian-made EVs lack sufficient domestic demand and export markets to justify these investments. For instance, Ford delayed EV production at its Oakville assembly plant, Northvolt cancelled its Quebec battery production facility, and GM halted production of its BrightDrop electric delivery van in Ingersoll.

The massive scale of pledged taxpayer support for EV projects in Canada warrants questions about returns on investment. From October 2020 to April 2024 alone, governments in Canada spent or allocated up to $52.5 billion on EV-related manufacturing facilities and tax credits.

But the returns have been far from stellar. Economist Jack Mintz estimated in 2024 that $35 billion in committed funds for Volkswagen, Stellantis and Northvolt—for projects expected to create employment for 8,500—would translate to roughly $4 million per job created. And according to a report from the Parliamentary Budget Officer, it will likely take 20 years to recover through tax revenue the $28.2 billion in promised subsidies from the federal and Ontario governments for two EV plants in Ontario—far longer than the original five-year target.

Honda’s reluctance to move forward with its $15 billion EV hub in Alliston, despite massive government support, should prompt policymakers to reconsider other corporate handouts at taxpayer expense. Though governments have set ambitious targets and pledged enormous sums of money, EV subsidies have proven to be a poor gamble.

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