The global race to develop industries around electric-vehicle production just keeps heating up.
On Tuesday, touring a Ford plant in Detroit that’s making electric pickup trucks, President Joe Biden touted his US$174-billion EV plan, including grants for new battery-production facilities. It was an indication of his administration’s aim to aggressively play catch-up with China, which got a huge head start building EV supply chains, and Europe, which has made inroads.
To listen recently to Justin Trudeau’s Liberals, Canada is right there in the mix. The idea is that this country’s unique combination of natural resources and auto-making expertise will allow it to be a major player in the entire process of building an EV – from mining and refining component minerals, through battery manufacturing to vehicle assembly. Commitments in last month’s federal budget – an $8-billion Net Zero Accelerator fund for clean-technology investment by large industry, a big tax credit for producers of zero-emissions goods – are supposed to help.
But a new report serves as a reality check about how far Canada, which has recently attracted vehicle-assembly commitments but made little progress on earlier stages of the supply chain, currently is from its EV dream. And it lays out many as-yet untaken steps – including specifically targeted funding streams, regulatory changes and intergovernmental structures – if Ottawa is serious about competing.
To be released Wednesday by the think tank Clean Energy Canada, the document titled Turning Talk Into Action is the product of a two-day meeting that pulled together a cross-section of industry leaders and advocates with an aim for consensus recommendations for a battery supply chain (where most preassembly EV opportunity lies). Among other attendees were executives from GM Canada and bus manufacturer Lion Electric, the Automotive Parts Manufacturers’ Association and Magna International, Unifor, battery-manufacturer E-One Moli Energy and the Mining Association of Canada.
Considering that most of those participants have a vested interest in close relations with Ottawa, the report is surprisingly unvarnished in assessing where things stand.
“Canada has minimal existing or announced manufacturing capacity,” it states. “In fact, there is very limited activity happening at any stage along the supply chain,” including minerals fed into it, capacity growth for refining raw materials, and battery-parts manufacturing.
On the report’s list of challenges, some – such as lack of a homegrown automaker to be a champion, and the unlikelihood of competing with China on low-cost production – can’t be laid at the government’s feet.
Others, including slow regulatory processes and lack of investment in commercialization following research and development, are more within Ottawa’s power to address.
But the overarching barrier included on that list is that Canada is more reluctant than other countries to engage in targeted, government-led industrial strategy, opting for a comparatively “passive approach to economic development.”
The report is fairly dismissive of the government’s Net Zero Accelerator, calling it “not the right funding mechanism to solve the battery supply chain challenges Canada faces.” The authors don’t like that it’s for all manner of cleantech investment, forcing companies in the EV space to compete with other sectors. And they express doubt about it being “nimble” enough to meet funding needs, big and small. (The NZA is only to provide grants of at least $10-million.)
At the centre of the report’s lengthy list of recommendations for new policies is the establishment of a $15-billion dedicated battery supply-chain fund. It’s unlikely the government will cough up such a whopping sum, even if it reflects the cost of competing with other governments throwing money around. But the notion of a fund tailored specifically to EV and battery needs is hard to dismiss if Canada is trying to make a real play.
Many of the other proposals are less imposing in and of themselves, but implementing them at once would require much greater focus than Ottawa has shown to date.
For mining activities at the start of the supply chain, the report suggests a concerted effort to develop better data and transparency on Canada’s accessible stock of minerals and metals. From there, it recommends capital plans for that sector, faster permitting processes, a mining-electrification fund and quick assessment of which raw materials Canada is best positioned to refine and how to kickstart those operations.
To help Canada build competitive advantage through leaps such as more efficient manufacturing processes and more easily recyclable batteries, it suggests a government-funded Battery Centre of Excellence that would cluster researchers, mining companies, battery manufacturers and automakers into one hub.
To make up for the impossibility of besting China on price, it calls for an international marketing strategy centred on Canada’s ability to mine and manufacture comparatively sustainably.
And while proposing a federal-provincial secretariat alongside a domestic industry task force to help co-ordinate these and other measures, it also suggests working with the U.S. to establish a North American Battery Alliance – modelled after a similar structure in the European Union – that would recognize the integrated continental auto sector.
The report doesn’t quite add up to a comprehensive plan. Need for consensus among contributors means some proposals are still fairly broad. It’s particularly vague on how to increase EV demand in a way that could help attract industry, acknowledging “experts did not agree” – likely a reference to disagreement about how much government should regulate a shift away from internal-combustion engines.
But it’s a whole lot closer to a roadmap than Ottawa has yet produced.
The report could inadvertently make the case that – with other countries further ahead, existing barriers, huge funding needs – the hill is too steep for Canada to climb.
But one thing Mr. Trudeau’s government has been clear about is that it considers the EV supply chain as one of the best available ways for Canada to help lower emissions while replacing old-economy jobs (including in traditional vehicle manufacturing) with new ones.
So what it has heard this week – from Mr. Biden in Detroit, and from industry here – should light a fire under it.
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