Honda Motor was expected this week to announce plans to build a battery electric vehicle (BEV) factiry in Canada’s Ontario province, according to local reports in Japan citing a source within the Canadian government.

The automaker was understood to have agreed a deal for state aid with federal and provincial governments for the project which was expected to involve investment of close to US$10bn in new vehicle and battery manufacturing facilities to be built near the company’s existing manufacturing operations in Alliston, just outside Toronto.

Ontario premier Doug Ford said this week: “We've landed a new deal. It will the largest in Canadian history, double the size of the Volkswagen deal,” referring to the C$7bn (US$5bn) investment announced earlier by the German automaker.

Canada has been positioning itself as a major investment destination for BEV and battery manufacturing in North America by providing generous tax incentives and access to renewable energy and mineral deposits such as lithium.

The government last week announced a new business tax credit in its federal budget which provided a 10% rebate on the construction costs of new buildings used in the BEV supply chain.

It gas also set a target of switching its domestic market entirely to zero emission vehicles by 2040.