News that Honda is retooling its plant in Alliston, Ont., to produce hybrid vehicles, including the 2023 CR-V Hybrid crossover, is a precious bit of good news for the province, which is struggling to gain a slice of the US$515-billion that the auto industry is investing in an unprecedented pivot to electric vehicles.
The provincial and federal governments are each pitching in $131.6-million toward Honda Canada’s $1.38-billion investment.
In the grand scheme of things, however, Honda’s investment is a small sliver of a gigantic cake, which, once it’s gone, will be gone. As The Globe reported previously, after the initial EV investments are made, the next big round may not come for another 10 years. Building a strong EV manufacturing base now – not in five or 10 years – is necessary in order to secure the long-term survival of Ontario’s auto industry, and the more than hundreds of thousands of jobs that directly and indirectly depend on it.
As it stands, Ontario is lagging way behind when it comes to EV adoption, and is at risk of missing out on the EV and battery manufacturing boom as well. The provincial government needs to get much more serious about EVs, and fast.
“The window is closing so quickly,” said Joanna Kyriazis, clean transportation program manager at the Clean Energy Canada think tank. “If you look at the gigawatt-hour needs to serve the North American [EV battery] market by 2030, there’s just going to be a few more battery plants,” she said. That’s because most plants are already either built or in-progress.
Vic Fedeli, Ontario’s minister of economic development, job creation and trade, said in an interview that he is confident the province will land at least one EV battery manufacturing plant before the election in June. More related announcements are expected imminently as well.
So far, the U.S. has been the big winner when it comes to EV manufacturing investments in North America. Ford is spending US$11-billion on three battery plants and a new assembly facility, all of which will be south of the border in Kentucky and Tennessee. General Motors is spending nearly US$7-billion in Michigan, creating an additional 4,000 jobs, to produce electric pickups and battery cells.
Protectionist measures proposed by U.S. President Joe Biden meant to bolster the burgeoning U.S. domestic EV industry will further hurt Canadian workers and Ontario’s chances of landing fresh investments.
At the time of writing, Canada doesn’t have a complete battery manufacturing plant, despite the fact the country is rich in many key minerals needed to make batteries, and has relatively clean electricity. Both factors, as noted in a Conference Board of Canada report published in December, help make Canada an attractive place for battery makers. As the heart of Canada’s auto industry, Ontario would seem the obvious place to build these factories.
Also working to our advantage is the fact that global supply chain disruptions are pushing auto makers to reduce their reliance on China and bring EV battery supply chains closer to regions where these vehicles will eventually be sold, Kyriazis said. Again, that bodes well for Ontario.
Because EVs have fewer parts than internal-combustion vehicles, they generally require less labour to create, but making batteries and associated components is a key area in which the auto industry could actually gain jobs.
And yet, the U.S. has been, “kicking Canada’s butt” when it comes to attracting battery-cell manufacturing facilities, said Kyriazis. Over the last year alone, the U.S. has secured $20- to $30-billion in EV battery investments, she added.
Even Quebec recently beat out Ontario and other jurisdictions to win new battery supply chain and recycling plants.
The Honda announcement is great news for the thousands of workers in Alliston, Ont., and the auto industry. However, these new hybrid vehicles won’t help Canada reach its zero-emissions vehicle (ZEV) sales targets. ZEVs are usually defined as plug-in hybrid, hydrogen-fuelled, or fully electric vehicles, not regular hybrids, which do not plug in and only recharge the battery while driving.
That’s not to say Ontario hasn’t had any success in attracting ZEV investment. It has, to the tune of around $4-billion, thanks to efforts from unions, as well as the provincial and federal governments. The province and feds each chipped in $295-million as part of a $1.8-billion investment to turn Ford’s Oakville Assembly Complex into a hub for electric vehicle production. General Motor is spending $1-billion to build BrightDrop electric delivery vans at its Ingersoll, Ont., plant, although that announcement was contingent on securing government support.
Make no mistake, winning new projects is hard. Competition is cutthroat. But the fact that Ontario is behind the curve on EV sales is certainly not helping.
“Our taxpayers’ money is being invested in the supply side,” Minister Fedeli said. “From the OEMs, battery manufacturing, steel, critical minerals, parts, tech, all of the components, we’re all-in on the supply side.”
But the demand side, which has so far been essentially ignored by the government, is critical too according to Ontario’s own Driving Prosperity plan. The document lists “encouraging EV adoption” as one of three things the province will do – in addition to promoting Ontario, and strengthening U.S. relations – in order to reposition the auto industry to build cars of the future. But, when it comes to how, exactly, Ontario will encourage EV adoption, the plan’s only answer is to establish a policy advisory council.
This province is by far the largest market for new vehicles in Canada, but sales of EVs and plug-in hybrids (PHEVs), are just half what they are in Quebec. In B.C., 11.2 per cent of new vehicles registered through the third-quarter of last year were EVs and PHEVs. In Ontario, that number is just 2.7 per cent.
One of the Ford government’s first orders of business was to abolish a provincial rebate program, similar to those now in B.C. and Quebec, which made electric vehicles less expensive for consumers. After that program was abolished, sales predictably took a nosedive.
“When you are trying to attract investment into this new and emerging technology, it is symbolically important to also be committed to helping consumers actually purchase these vehicles,” said Brian Kingston, president of the Canadian Vehicle Manufacturers’ Association, a lobby group representing Ford, G.M. and Stellantis.
“To be a jurisdiction that says well, ‘we just want to produce but we’re not interested in selling or helping our consumers make the switch [to ZEVs]’ – I don’t think that is a compelling case,” he added.
The connection between supply and demand seems to be more than just symbolically important. As Joanna Kyriazis noted, while other factors are certainly at play here, there is a correlation between where we see the most battery and EV-related investment, and where EV uptake is strongest. China and the European Union account for 80 per cent of global EV sales.
“European and Asian auto makers have spent five times as much as their North American counterparts on EVs and batteries,” she said. “They’re investing so much more heavily and are really building up the capacity in those regions.”
The number of auto industry manufacturing and parts jobs in this province is roughly half what it was 20 years ago, according to Conference Board of Canada data. For the sake of the hundreds of thousands of people whose jobs still depend on making cars here, Ontario needs to start taking ZEVs seriously.