Like a rapper officially releasing a leaked diss track, Honda has dropped a long-awaited project that’s making waves throughout the industry. 

What happened: Honda officially announced its $15 billion electric vehicle investment plan in Ontario, with designs to build four — count ’em, four — new EV plants in the province. The federal government touted the move as the “largest auto investment in Canada’s history.”

• The feds are expected to grant Honda up to $2.5 billion in tax incentives, including the brand-new EV Supply Chain investment tax credit.
  
  
• Ontario is also expected to chip in up to $2.5 billion, by covering certain costs for the plant and offering up cold hard cash. 

Zoom in: Honda will build a full-fledged EV manufacturing plant that will crank out 240,000 vehicles a year and an accompanying battery plant in Alliston. The other two plants are a factory making cathode active materials (CAM) and a factory making separators, both of which help power EV batteries.

• The CAM plant is a joint venture with South Korea’s Posco Chemicals, while the separator plant is a venture with Japan’s Asahi Kasei. Neither have locations yet.

Why it matters: There’s been no shortage of EV announcements over the past year, but they have been focused largely on EV battery production. Honda’s plants will be the first ones to bring a fully integrated EV supply chain to Canada, from cathodes to chassis.

Yes, but: While EV sales continue to rise, broader interest appears to be on the decline. AutoTrader’s annual EV interest report found that 46% of Canadians were interested in buying an EV, down from 68% in 2022, mainly due to cost and performance concerns with current models.—QH

Even with AI tools, highly caffeinated beverages, and a roster of podcasts eager to tell us all how to work “smarter,” Canadians are in a bit of a productivity slump. 

Driving the news: Canada’s economic output per person has fallen below its long-term trend by 7% — a loss of around $4,200 per person — according to a new report by Statistics Canada.

• From 1981 to 2020, Canada’s GDP per capita — a widely used measure of a country’s economic prosperity — grew by 1.1% every year, but it fell sharply during COVID and has yet to fully recover.

Why it matters: GDP per capita is a fancy way of describing how big the average Canadian’s slice of the country’s economic pie is, so when it starts shrinking (or not growing), it’s a sign that our quality of life is slipping. 

• Countries like Norway, Switzerland, and Iceland, which boast high GDP per capita, also land near the top of quality of life rankings.

Why it’s happening: GDP per capita growth in Canada is mostly driven by productivity, and as you might’ve heard from the Bank of Canada (and almost every economist in the country) recently, Canada’s experiencing something of a productivity crisis. 

• During the four decades prior to the pandemic, increases in productivity accounted for 93% of the growth in Canada’s real GDP per capita.
  
  
• Experts say a lack of competition and capital investments from businesses, a rapidly aging workforce, and an influx of newcomers working lower-paying jobs have all contributed to flagging productivity.

What’s next: With the number of Canadians over 85 expected to roughly triple over the next two decades, the Canadian economy is set to have a big hole in its workforce and, with it, a significant productivity hurdle to clear.—LA

The market for cigarettes might be going up in smoke, but Big Tobacco has new products ready to take their place.

Driving the news: Tobacco giants Philip Morris and Altria both posted revenues last quarter that blew past analyst estimates thanks to booming demand for smoke-free cigarette alternatives like nicotine pouches and heated tobacco sticks. 

• Philip Morris, in particular, had a massive Q1, shipping 33.1 billion IQOS heated tobacco sticks — a 20.9% increase from the quarter before.
  
  
• Meanwhile, shipments of its ZYN nicotine pouches skyrocketed nearly 80% year over year as usage exploded.

Catch-up: Nicotine pouches are tiny bags that release nicotine and flavourings (but not tobacco) when placed between a user's upper lips and gums. Heated tobacco sticks are exactly what they sound like: tobacco products that are heated, not burned, so as not to smoke. 

• Both products have been positioned as tools to help people stop smoking, but have gained loyal fans who continue to use them after they quit, or even use them in addition to smoking. 

Why it matters: As the cigarette dies a slow death, smoke-free products like IQOS and ZYN are shaping up to be the new crown jewels for Big Tobacco. But as adoption rapidly picks up, scientists and regulators are still unsure about the scope of potential adverse health effects.

In Canada: IQOS products are available, while Zonnic is the only brand of nicotine pouch approved for sale. The latter product is supposed to be used only to help quit smoking. Obviously, that has not been the case, with the Ministry of Health vowing to crack down on recreational use and use by minors.—QH