Ontario has emerged as North America’s leading destination for electric vehicle and battery manufacturing investment, securing over $46 billion in EV-related commitments between 2020 and 2025 while winning Site Selection Magazine’s Canadian Competitiveness Award for consecutive years. However, this investment momentum now faces significant headwinds from US tariffs and slower global EV demand, with several flagship projects—including Honda’s $15 billion investment—delayed by two or more years. The province’s economic growth forecast has been downgraded to 0.8-1.0% for 2025, roughly half pre-tariff projections, creating an uncertain environment for Ontario’s ambitious manufacturing renaissance.
Despite near-term challenges, Ontario’s structural advantages remain compelling: the only subnational jurisdiction in North America hosting five major automotive assemblers, a 90%+ carbon-free electricity grid powered by nuclear and hydroelectric generation, access to critical minerals essential for battery production, and Toronto’s position as the continent’s second-largest financial center. The recently announced $50-70 billion UAE investment framework signals continued international confidence in Ontario as a strategic investment destination.
Ontario captures Canada’s largest FDI project pipeline
Statistics Canada does not publish provincial FDI breakdowns, but project tracking data reveals Ontario’s dominant position. In 2023, Ontario attracted C$10.2 billion from Asia-Pacific investors alone—more than double the 2022 figure of C$4.7 billion—making it the largest provincial recipient of Indo-Pacific investment. Markham, Ontario overtook Toronto as the preferred city for Asia-Pacific investment in 2023, attracting over C$6 billion in a single year.
The province’s competitive standing is confirmed across multiple rankings. Site Selection Magazine awarded Ontario its #1 Canadian Competitiveness ranking in 2024 for the fourth consecutive year, with qualifying projects creating more than 22,000 new jobs. Notably, 11 of the magazine’s top 20 Canadian locations are in Ontario, including Brampton, Hamilton, Mississauga, Toronto, Waterloo, and Windsor-Essex. Toronto ranks #2 in the Americas for fDi Magazine’s Cities of the Future (behind only New York) and #4 globally in the major city category for foreign direct investment attraction.
Canada-wide context shows record FDI inflows of $85.5 billion CAD in 2024—36% higher than 2023—with Ontario securing the largest share by project count. Canada ranked #2 globally in the 2024 Kearney FDI Confidence Index, behind only the United States, maintaining a top-three position for five consecutive years.
| Regional Comparison | 2024 Indo-Pacific FDI | Share |
|---|---|---|
| British Columbia | C$7.1 billion | 37% |
| Quebec | C$6.6 billion | 34% |
| Ontario | C$5.0 billion | 26% |
Ontario’s 2024 Indo-Pacific share declined from approximately 44% in 2023, partly due to major one-time transactions in other provinces, including Taiwan’s $5.2 billion acquisition of Quebec-based Future Electronics. The United States remains the dominant source country for Canadian FDI overall, accounting for $683.8 billion in accumulated investment stock (45.5% of total), followed by Europe at $507.9 billion (33.8%) and Asia/Oceania at $188.4 billion (12.5%).
Automotive transformation anchors Ontario’s investment strategy
The automotive and EV battery sector represents Ontario’s most significant investment story, with $46+ billion committed to transform the province into North America’s emerging EV manufacturing hub. Ontario produces approximately 1.3 million vehicles annually, ranking second globally after Michigan, with five major OEMs operating assembly facilities: Ford, General Motors, Honda, Stellantis, and Toyota.
Volkswagen PowerCo’s St. Thomas gigafactory stands as the largest battery cell manufacturing facility in Canada and PowerCo’s largest globally. The $7 billion investment broke ground in October 2025, with 90 GWh annual production capacity sufficient to supply batteries for approximately one million EVs per year. The federal government committed up to $16 billion in production subsidies over ten years, with Ontario providing $500 million in direct incentives plus infrastructure investments. Production is scheduled to begin in 2027, with over 250 employees already hired toward an eventual workforce of 3,000 direct jobs.
NextStar Energy (Stellantis/LG Energy Solution joint venture) in Windsor represents Canada’s first large-scale lithium-ion battery plant. The $5 billion investment in a 4.23-million-square-foot facility began battery module production in 2024, with full cell production expected late 2025. The plant will achieve 49.5 GWh annual capacity—supplying approximately 40% of Stellantis’s North American EV battery requirements—and create 2,500 jobs. Combined federal and provincial tax incentives total approximately $15 billion.
Honda’s comprehensive EV ecosystem announcement in April 2024 represented the largest single automotive investment in Canadian history at $15 billion CAD. The plan includes an EV assembly plant (240,000 EVs/year capacity), standalone battery plant (36 GWh/year), cathode active material facility (joint venture with POSCO Future M), and separator plant (joint venture with Asahi Kasei). However, Honda postponed the investment by two years in May 2025 due to US tariff uncertainty, though the company maintains its commitment to the Ontario project.
| Major EV Investment | Amount | Jobs | Status |
|---|---|---|---|
| Honda Alliston | $15B | 5,200+ | Delayed 2+ years |
| PowerCo St. Thomas | $7B | 3,000 | Under construction |
| NextStar Windsor | $5B | 2,500 | Operational |
| Umicore Kingston | $2.76B | 600+ | On hold |
| Asahi Kasei Port Colborne | $1.6B | 300+ | Under construction |
Asahi Kasei’s Port Colborne facility represents Canada’s first wet-process lithium-ion battery separator plant. The $1.6 billion investment, with Honda holding a 25% stake via $417 million investment, will produce 700 million square meters of separator material annually—sufficient for approximately one million EVs. Construction commenced in November 2024 with production targeted for 2027.
Technology giants commit $40+ billion to Ontario expansion
Microsoft announced a $19 billion CAD investment in Canada (2023-2027), with Ontario receiving the majority through expansion of Azure data center regions in Toronto. The investment includes a Sovereign AI Landing Zone (SAIL), Threat Intelligence Hub in Ottawa, and new AI and cloud infrastructure coming online in 2026. Microsoft’s Canadian ecosystem supports 426,000 jobs through partners generating $41 billion CAD annually, while the company employs 5,300+ staff across 11 Canadian cities.
Amazon Web Services committed $24.8 billion CAD in infrastructure investment through 2037, with Toronto serving as a major technology hub. AWS’s Canada Central region operates from the Toronto area, with 5,000+ full-time jobs and 9,300+ annual FTE positions supported by AWS operations nationally. Google Cloud opened its Toronto region (northamerica-northeast2) in 2023, establishing two Canadian cloud regions with Protected B security accreditation.
The Toronto-Waterloo technology corridor ranks as the third-largest tech cluster in North America after San Francisco and New York, with 15,000+ technology companies including 5,200+ startups and 300,000-360,000 tech workers. The ecosystem’s valuation reached $71 billion, representing a 54.3% increase. The region hosts the highest concentration of AI startups globally, with Toronto home to more AI PhDs than any other Canadian city. The Vector Institute leads world-class AI research driving commercialization.
Major technology players with Ontario operations include Shopify, BlackBerry, OpenText, 1Password, and Arctic Wolf, alongside global giants Google, Apple, Meta, and NVIDIA. The University of Waterloo operates the world’s largest co-op education program, creating a continuous talent pipeline, while its unique intellectual property policy allowing students to retain ownership of their inventions has fostered entrepreneurial culture producing numerous technology unicorns.
Life sciences investments exceed $4 billion from global leaders
Ontario’s life sciences sector has attracted over $4 billion in investments from global biomanufacturers over three years, positioning the province toward its goal of 85,000 high-value jobs by 2030—a 25% increase from 2020 baseline. Toronto hosts 1,400+ life sciences establishments employing 30,000 professionals contributing $2+ billion to the local economy.
AstraZeneca announced an $820 million CAD expansion in January 2025, adding to investments totaling $1.3+ billion since 2023. The Mississauga global R&D hub expansion focuses on AI, computational pathology, and digital health technologies, creating 700+ new highly skilled jobs to complement its existing 2,100+ Canadian workforce. AstraZeneca leads 210+ global clinical studies from Ontario and completed a $3 billion acquisition of Hamilton-based Fusion Pharmaceuticals in 2024. Invest Ontario provided a $16.1 million grant through the Invest Ontario Fund.
Roche Canada committed $130+ million to expand its Global Informatics Hub in Mississauga, announced November 2024, focusing on AI, machine learning, computational biology, and data analytics. The investment creates up to 250 new positions at one of Roche’s five global informatics hubs.
OmniaBio opened Canada’s largest cell and gene therapy contract development and manufacturing organization in Brampton with a $580 million investment, operating as a subsidiary of Toronto-based CCRM. The state-of-art facility commenced operations in early 2024. All top 10 global pharmaceutical companies conduct clinical trials in Ontario, with approximately 50 international pharma and biotech companies maintaining headquarters in the Toronto Region.
Financial services and resource sectors anchor Ontario’s diversified economy
Toronto serves as Canada’s financial capital and North America’s second-largest financial center after New York, ranking #8 globally according to The Banker. The city hosts the highest concentration of financial services employment in North America at 8.3%, surpassing London (6.5%) and New York (6.4%), with 454,000 workers in the Toronto Economic Region representing 66.9% of Ontario’s financial sector. All five major Canadian banks are headquartered in Toronto: Royal Bank of Canada, TD Bank, Bank of Montreal, Scotiabank, and CIBC.
The Toronto Stock Exchange ranks seventh globally by market capitalization and serves as the world’s largest exchange for mining, oil, and gas listings. Financial services represent 13.6% of Toronto’s economy—the largest private sector contributor to GDP—generating $14 billion in exports and $643 billion in outward FDI (50% of Canada’s total).
Ontario’s mining sector contributed $23.8 billion to GDP in 2023 from 36 active mining operations, with 22,000 direct jobs averaging $150,000 annual salary and supporting 126,000 indirect positions. The province produces 45% of Canada’s gold (2.9 million ounces worth $6.5 billion from 18 mines) and hosts critical minerals essential for EV batteries including nickel, copper, cobalt, and lithium. The Ring of Fire—a 5,000 square kilometer mineral deposit containing chromite, nickel, copper, and platinum group elements with estimated potential of $120 billion (comparable to Athabasca oil sands)—represents Ontario’s next frontier, with Wyloo Metals’ Eagle’s Nest project targeting mine construction by 2027 and production by 2030.
Middle Eastern investment framework signals strategic partnership
The November 2025 UAE-Canada investment framework represents a potentially transformational development for Ontario. The agreement commits US$50-70 billion in investments over coming years, focusing on energy, AI, logistics, mining, and critical minerals—sectors aligned with Ontario’s strategic priorities. UAE FDI stock in Canada reached US$8.8 billion in 2024, with total Emirati investments approaching C$30 billion.
Mubadala Investment Company’s $8.7 billion acquisition of CI Financial (announced November 2024) represents the largest recent Gulf sovereign wealth fund transaction in Canada. TAQA (Abu Dhabi National Energy Company) accounts for approximately two-thirds of UAE investments in Canada, with roughly C$20 billion deployed in petroleum and natural gas. DP World operates multiple ports across Canada, establishing integrated logistics capabilities.
The framework includes a $1 billion critical minerals processing project, aligning with Ontario’s strategy to develop domestic supply chains for battery materials rather than exporting raw minerals. This represents the first Canadian Prime Ministerial visit to the UAE in over 40 years, signaling elevated bilateral economic engagement.
Invest Ontario delivers comprehensive incentive architecture
Invest Ontario, the provincial investment attraction agency, has facilitated over $28 billion in transformative automotive and EV-related investments over three years, expected to create more than 12,000 new jobs. The Invest Ontario Fundhas grown to approximately $1.3 billion (increased by $600 million in the 2025 budget), with results including $4.1 billion in secured investments and 4,012 new jobs in advanced manufacturing, life sciences, and technology. The agency provides site selection support, market intelligence, financing assistance, and workforce solutions including immigration fast-tracking for key personnel.
The Ontario Made Manufacturing Investment Tax Credit provides a 10% refundable tax credit (enhanced to 15% for 2025-2030) on eligible capital investments up to $20 million annually, targeting manufacturing facilities and equipment. The Ontario Innovation Tax Credit delivers 8% refundable credit on SR&ED expenditures up to $3 million (maximum $240,000 annually), stackable with federal SR&ED and provincial ORDTC credits potentially totaling 46.5% combined support. The Ontario Interactive Digital Media Tax Credit offers 35-40% on qualifying digital product development expenditures.
Regional development funds include the Northern Ontario Heritage Fund Corporation, which has invested $841+ million in 6,894 projects since June 2018, leveraging $2.5+ billion in total investment and creating or sustaining 10,560+ jobs. The Eastern and Southwestern Ontario Development Funds provide interest-free loans up to 15% of project costs (maximum $5 million) for businesses committing to job creation and capital investment.
Regional ecosystems offer specialized investment propositions
Windsor-Essex has emerged as Canada’s EV battery capital, anchored by the NextStar Energy plant and supported by growing supply chain including Dongshin Motech ($60-90 million battery casing facility, 300 jobs), DS Actimo ($60+ million battery cell module case facility), and the Flex-Ion Battery Innovation Centre ($15 million R&D facility). The region’s proximity to Detroit and position at Canada’s busiest commercial border crossing (approximately $750 million daily trade) provides integrated access to the North American automotive ecosystem.
Ottawa’s Kanata North Technology Park, Canada’s largest tech park, houses 540+ companies employing 24,000-33,000 people and contributing $13+ billion annually to GDP—double all other 26 Canadian tech parks combined. The region conducts 90% of all Canadian telecommunications R&D, with Nokia, Ciena, Ericsson, and Mitel driving 5G and telecommunications innovation, built on talent legacy from former Nortel Networks.
Greater Sudbury anchors Northern Ontario’s mining economy with $3.3 billion annual GDP contribution from mining alone, hosting 345+ mining supply and service businesses (40% of Ontario’s total). The region positions for critical minerals processing with Wyloo Metals planning a battery materials facility to process Ring of Fire output locally rather than shipping raw ore.
The Golden Horseshoe region (population 9.76 million growing to 11.14 million) combines Hamilton’s historic steel manufacturing base—increasingly important for low-carbon steel in EV production—with life sciences growth including OmniaBio’s $580 million cell therapy facility and AtomVie’s $138 million radiopharmaceutical manufacturing investment.
Trade uncertainty clouds otherwise positive outlook
Ontario’s economic forecasts have been substantially downgraded due to US tariff impacts. The Ontario Ministry of Finance projects GDP growth of just 0.8% in 2025 and 0.9-1.0% in 2026—roughly half pre-tariff projections of 1.7-1.8%. The Financial Accountability Office forecasts 0.9% growth in 2025 and 1.0% in 2026, with US tariffs projected to raise unemployment by 1.1 percentage points to average 7.7% through 2025-2029.
Manufacturing bears disproportionate impact: projections indicate 57,700 fewer jobs (-6.8%) in 2026 versus no-tariff scenarios, with primary metals (-17,700 jobs), motor vehicle parts (-16,300 jobs), and machinery/electronics (-9,300 jobs) most affected. Regions including Windsor (-1.6% employment), Guelph (-1.6%), Brantford (-1.5%), and Kitchener-Cambridge-Waterloo (-1.5%) face greatest exposure.
The government has responded with the $5 billion Protecting Ontario Account for tariff-impacted businesses, $150 million Ontario Together Trade Fund for market diversification, six-month provincial tax deferrals, and enhanced manufacturing tax credits. By August 2025, over 85% of Canada-US trade became tariff-free under USMCA exemption restoration, though uncertainty persists.
Infrastructure spending provides counter-cyclical support through Ontario’s $200+ billion 10-year infrastructure plan, with Infrastructure Ontario reporting 25 projects in pre-procurement or active procurement stages valued at $30+ billion combined, plus 20 additional projects in early planning. The Transit-Oriented Communities Program could add 340,000 housing units supporting 75,000 jobs.
Conclusion: Structural strengths position Ontario for recovery
Ontario’s foreign direct investment proposition rests on unique structural advantages that persist despite near-term trade disruption. The province offers the only jurisdiction in North America with five major automotive OEMs, integrated EV supply chain from critical minerals through finished vehicles, 90%+ carbon-free electricity at competitive rates, world-class talent from universities producing 70,000+ STEM graduates annually, and proximity to the world’s largest consumer market.
The $46+ billion EV investment commitment represents transformational capital reshaping Ontario’s manufacturing economy, even as project timelines extend. The technology sector continues strengthening through $40+ billion in commitments from Microsoft, AWS, and Google, while life sciences attracts sustained global pharmaceutical investment. The UAE framework signals emerging Middle Eastern capital flows targeting critical minerals and strategic sectors.
Key uncertainties include trade policy evolution as USMCA negotiations continue, global EV demand trajectory affecting original investment assumptions, and fiscal constraints limiting government response capacity. However, Ontario’s combination of resource endowment, clean energy, skilled workforce, and geographic positioning provides durable competitive advantages likely to sustain investment attraction as trade conditions stabilize. Growth is projected to return to trend rates of approximately 1.8-1.9% by 2027-2028, suggesting current disruption represents a cyclical challenge rather than structural decline in Ontario’s investment attractiveness.
