Honda Canada is postponing its $15 billion electric vehicle project in Ontario for approximately two years, pointing to weak EV demand and market uncertainty caused by US tariffs.

The project, announced in April 2024, would have included a retooled assembly plant, an electric vehicle battery plant, and two battery parts facilities throughout Ontario.

Honda Canada spokesman Ken Chiu said Tuesday the decision “has no impact on current employment or production levels” at the company’s Alliston plant. The announcement comes as Ontario’s automotive industry faces thousands of layoffs while US President Donald Trump’s 25% tariffs on foreign-made vehicles take effect.

The project was expected to create 1,000 new jobs while maintaining the existing 4,200 positions at the assembly plant. The facility was projected to produce up to 240,000 vehicles annually by 2028 when fully operational.

Ontario Premier Doug Ford remains optimistic about Honda’s future plans. “They’ve promised us they’re going to continue on with their expansion,” Ford said at a pre-budget announcement in Pickering. He added his government would hold automakers “accountable” for investments backed by public funds.

Industry experts cite multiple factors behind the postponement. Flavio Volpe, head of the Automotive Parts Manufacturers’ Association, said US tariff actions “continue to be felt by everyone, Honda included.”

David Adams of Global Automakers of Canada noted slower-than-expected consumer adoption of electric vehicles also influenced the decision.

Western University professor Gal Raz attributed the delay to both tariffs and consumer hesitation, saying governments have focused on production investments without adequately addressing concerns about high costs and limited charging infrastructure.

The federal government had committed roughly $2.5 billion in tax credits, with Ontario pledging a matching amount in support for the project that was to receive backing from both governments.

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