By Paul Vieira and Vipal Monga

Honda Motor is nearing a deal to assemble electric vehicles and components in Canada, with the government agreeing to partly offset the Japanese auto maker's capital costs through recently unveiled tax breaks, people familiar with the matter said.

A formal announcement is expected as early as Thursday, according to one person familiar with the deliberations. The Premier of Ontario, Doug Ford, told a conference Monday about a pending new auto-related investment which he said would be among the largest on record. Ontario is also home to Canada's auto sector.

"We've landed a new deal," said Ford, who governs Canada's largest province by population and gross domestic product. "We'll be announcing it this week."

Representatives for Honda didn't immediately return a request for comment. Canadian Finance Minister Chystia Freeland declined to comment about Honda's investment at a press conference in Montreal.

Bloomberg earlier reported details of Honda's pending investment in Canada.

Enticing Honda suggests Canada is having some success in persuading automakers about the country's attractiveness as a manufacturing hub for electric vehicles, given its proximity to the U.S. market, access to clean power and skilled workforce, said Flavio Volpe, president of Canada's Automotive Parts Manufacturers' Association.

"The numbers have to work, and they have to work better than anywhere else in the world," said Volpe. Under the U.S.-Mexico-Canada trade treaty, Canada is able to ship assembled vehicles and auto parts to their North American counterparts on a duty-free basis.

Honda already assembles its CR-V and Civic models at a factory roughly 70 miles northwest of Toronto, in Alliston, Ontario.

Last year, Volkswagen and Stellantis revealed plans to build battery-making factories in Ontario, a province with sources of nickel, copper and cobalt, which are metals essential for making batteries that power electric vehicles. To secure their presence, Canada agreed to provide the automakers a combined 28 billion Canadian dollars, or the equivalent of US$20.4 billion, in subsidies over a nearly 10-year period.

This time, Honda stands to benefit through the introduction of a 10% tax credit for companies on the cost of buildings used in key parts of the electric-vehicle supply chain that Freeland included in her annual budget plan, released last week. The credit as proposed applies to electric-vehicle assembly and battery production, and the manufacturing of cathode materials. Canada estimates the tax credits could cost the treasury more than C$1 billion over a six-year period, beginning in 2029.

Write to Paul Vieira at and Vipal Monga at

(END) Dow Jones Newswires

04-22-24 1502ET