By Paul Vieira

OTTAWA--Canadian Finance Minister François-Philippe Champagne remains confident in the government's growth strategy of luring electric-vehicle production through tens of billions in incentives despite a setback delivered this week by Honda Motor.

"The North Star is towards electrification," Champagne told reporters Wednesday when asked about concerns over Honda's decision this week to postpone by about two years an estimated $11 billion EV manufacturing project northwest of Toronto. Honda cited weaker-than-expected EV sales for its decision, and that the company would diverge more about its EV strategy next week.

Champagne said Honda remains committed to the project, which envisages production of about 240,000 EVs annually, and 36 gigagwatt hours of EV batteries. "What you're seeing now is not unique to Canada," he said, adding that EV production capacity outstrips demand at this stage. He said the cost of EV batteries would need to decline further before demand for electric cars picks up.

Earlier, Industry Minister Melanie Joly said she was hoping to speak with senior Honda executives before the end of the day.

Research from Canada's parliamentary budget watchdog indicates that manufacturers, between 2020 and 2024, unveiled plans to invest roughly $33 billion in EV and related supply-chain production. The Canadian government pledged $22 billion in financing and tax breaks to lure those companies.

Honda is not the first setback for Canadian officials in their push to attract EV investment. Quebec-based Lion Electric, a maker of electric trucks and buses, has filed for bankruptcy protection roughly four years after obtaining government support for a battery-pack assembly plant. Swedish battery maker Northvolt has also filed for bankruptcy, and its planned factory in Quebec is also facing a sizable delay.

Write to Paul Vieira at paul.vieira@wsj.com

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(END) Dow Jones Newswires

May 14, 2025 14:59 ET (18:59 GMT)

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