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The federal government is welcoming reports that Japanese automaker Honda is considering building an electric-vehicle factory in Canada, which is scrambling to become a leader in all elements of the EV market.

Japanese news group Nikkei reported Sunday that spending on the potential EV plant, which may also produce electric batteries, could reach $18.5-billion. This would be one of Honda’s largest investments in the race to catch up with U.S. and European rivals in EV production, the media outlet said.

A statement from federal Innovation, Science and Industry Minister François-Philippe Champagne says the fact that this country merits consideration “is a testament to Canada’s growing reputation as a green supplier of choice and global EV leader.”

Nikkei reported that Honda is looking at several potential sites, including next to an existing automobile factory in Ontario. The automaker expects to decide by the end of 2024, with the new facility to go on stream as early as 2028, the Japanese outlet said. Honda has a manufacturing facility in Alliston, Ont.

John Bordignon, a spokesperson for Honda Canada, would only say that the automaker “is considering a number of initiatives as we move into the electrified era.” He said in a statement that Honda is currently focused on what he called the automaker’s “EV Hub” being established in Ohio, where it will begin production of EVs and EV batteries in North America in late 2025.

Ottawa has big ambitions in clean technology, and Prime Minister Justin Trudeau wants Canada to become “a world leader” in critical minerals and batteries that underpin this sector.

It’s not clear whether the federal or Ontario governments will offer subsidies for a Honda EV plant. But both Ottawa and the province have a track record of financial assistance for the EV sector.

Ottawa and Ontario have already doled out billions in help to two battery manufacturing plants in the province, including $13.2-billion in federal production subsidies last April, for a new EV. battery plant to be built by Volkswagen in St. Thomas, Ont. Last July, the two governments announced subsidies for a Stellantis-LG Energy Solutions EV battery manufacturing plant in Windsor, Ont., worth up to $15-billion.

Mr. Champagne said he thinks factors aside from subsidies are attracting green investments.

“Reports about Honda looking to make a significant investment in Canada speaks to the quality of work force and the strength of our industry,” his statement says. “We will continue to work tirelessly to position Canada’s auto sector for the 21st-century economy.”

In December, the federal government announced a plan that seeks to end sales of gasoline-powered or diesel-powered cars, SUVs, crossovers and light-duty pickup trucks in Canada by 2035. (Emergency and fire-fighting vehicles are excluded.)

Nikkei reported that North America accounts for roughly 40 per cent of Honda’s global sales. It expects to sell about 1.6 million vehicles there in the current fiscal year ending March 31, but most of these are gasoline-powered, the Japanese media outlet reported. Since Honda aims to have EVs account for 40 per cent of North American sales by 2030 and 80 per cent by 2035, the new plant is certain to become a key production hub, it said.

Last October, the federal and Ontario governments announced they were together investing nearly $1-billion into an EV battery component plant in Eastern Ontario. A facility in Loyalist Township owned by Belgium-headquartered Umicore will build cathode active materials and precursor cathode active materials.

Flavio Volpe, president of Canada’s Automotive Parts Manufacturers’ Association, said a Honda EV factory in Canada would be better than consumer incentives to buy EVs from abroad.

”We should partner with Honda to create EV jobs in Canada rather than offering purchase incentives on cars imported from China,” he said.

With reports from The Canadian Press

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