Canada must do more to connect the electric vehicle supply chain, industry executives say

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Canadian ambition to be a force in electric vehicles could be driven off course by insufficient support for key segments within the supply chain, including critical-mineral processing, or the lack of a strategy to attract capital with incentives from government, senior industry executives say.

The country is already playing catch-up with Europe, the United States and China, which have plowed ahead with massive investments as demand for zero-emission transport trends higher.

Canada must develop its own long-term blueprint, incorporating the minerals used in batteries and other components right through to assembling vehicles and developing charging networks, according to a survey of sector leaders conducted by Accelerate. The industry association is a coalition of manufacturers, parts suppliers, miners and others seeking to weave together that supply chain.

Governments have committed tens of billions of taxpayer dollars to manufacturing plants for batteries and their components in Ontario and Quebec.

A missing piece remains the capacity to process raw materials that go into those cells. This midstream processing is one key to ensuring Canada is fully integrated with the North American EV industry, said Marissa West, president and managing director of GM Canada.

“China has a huge base of this investment already – the majority of the capability and the intellectual property for processing these raw materials into what we actually need to go into the battery cells resides in Asia. It doesn’t reside in North America,” Ms. West said in an interview.

“And I think it’s absolutely prudent to attract the investment into the country, into Canada, into North America, so that we can continue to build that supply chain, but also reinsert the innovation and evolution of this technology here in North America.”

GM and South Korea’s Posco Chemical Co. Ltd. are building a $600-million plant in Bécancour, Que., to produce cathode materials for EV batteries, with the provincial and federal governments funding about half the price tag. In addition, the Detroit-based auto giant has converted plants in Oshawa and Ingersoll, Ont., to assemble EVs, also with government support.

Canada has all the necessary segments to build a full supply chain, she said, including the raw materials, a largely carbon-free power grid, talented work force with experience in manufacturing and full integration within the North American market, and that presents a “generational opportunity.” The Accelerate survey reflects optimism among executives about the potential, based on those attributes.

A challenge, however, will be attracting the capital for all parts of the EV industry, especially as the United States woos investment with the Biden administration’s Inflation Reduction Act, which features US$369-billion in green incentives.

“It’s going to take all of the assets in Canada’s favour as well as continued support from the government to make sure that we do take advantage of this opportunity,” Ms. West said.

Accelerate comprises companies and organizations in mining, batteries, fuel cells, vehicle manufacturing, infrastructure, the public sector, research and labour. It polled 21 top executives from several of those segments to gauge how the country is faring as it gears up to compete with global giants.

Among other participants were senior officials from the Canadian units of Stellantis NV STLA-N, Volkswagen AG VWAGY, Glencore PLC GLNCY, Rio Tinto Group and Nova Bus/Volvo Group as well as Lion Electric Co. LEV-WT-T, Linamar Corp. LNR-T, Martinrea International Inc. MRE-T and smaller players.

Uncertainty has crept in over the ability to ramp up supplies of nickel, lithium, graphite and copper to match Canada’s hopes, as financing new mines and expansions has fallen well below historical averages and capital remains tight. Recycling of materials from spent batteries is seen as one way to set Canada apart.

Another concern among executives is the slow pace of expanding the charging infrastructure, which remains a key hurdle to acceptance among consumers.

Still, Canada has experience in developing industrial strategies, and that can be instructive as the EV sector embarks on what will be a multiyear effort, said Matthew Fortier, chief executive officer of Accelerate.

As an example, he points to the Alberta oil sands, which boomed in the 1990s and 2000s after the industry and governments developed a series of measures, including tax and royalty incentives, that attracted tens of billions of dollars in investment and turned the country into an energy power.

“This is something that could be a big part of Canada’s industrial future that can create wealth over the course of generations,” Mr. Fortier said. “Now is the time to invest in that and it will pay dividends if we get it right, but we need to know what getting it right means.”

Canada currently has nowhere near the capacity to process raw materials today to compete with Asia. It must set itself apart by investing in research that would lead to processing that emphasizes environmental protection while keeping costs in check, said Dan Blondal, CEO of Nano One Materials Corp.

The company’s plant for manufacturing lithium iron phosphate cathode material in Quebec is the only one of its kind outside Asia. The operation is in the precommercial stage.

“It’s a greenfield opportunity here. We have a chance to do it right and do it better and that’s where government’s role really comes in – to support innovation, particularly in the midstream between the mine and the battery,” Mr. Blondal said. “Ultimately, it’s the chemical processes that bring all of these materials together that define the supply chain.”

Executives say the industry has to develop a set of indicators and timelines to gauge progress. The difficulty will be deciding which ones should be prioritized. The way the industry works, not all vehicles that are sold in Canada will be built here, so one measure could be the percentage of minerals that are extracted in Canada and remain in the supply chain, Ms. West said in the Accelerate survey.

Others metrics could involve sales figures to individuals and fleet managers, numbers of factories, job-creation and sustainability indicators, such as carbon emissions reductions and waste elimination.

Editor’s note: This story has been corrected to remove Toyota as a listed participant in the survey.