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Peter Frise is a mechanical engineer who worked in several industries before joining the University of Windsor, where he founded Canada’s first university program in automotive engineering in 1998. He later led AUTO21, Canada’s national automotive research and development network.

It is hard to overstate the importance to Canada’s auto sector of a recent announcement by Stellantis and LG Energy to build a large-scale electric vehicle battery manufacturing facility in Canada. At 280,000 square metres, the $5-billion facility is slated to be the largest in North America and one of the biggest in the world.

While auto assembly plants are crucial to the health of Canada’s automotive sector, they are not the only element of a healthy auto industry, and other countries also have good assembly plants. In addition, the electric vehicle production mandates announced for the Canadian plants are helpful, but they will not sustain our industry for the long term. What we need is a complete auto ecosystem, one that brings together research and development, materials, parts and assembly.

Powertrain factories – which make motors, battery packs and everything that delivers power to a vehicle’s wheels – are often bigger investments by automakers and usually supply more than one vehicle assembly plant. These large investments are a clear signal that an auto maker is committed to a jurisdiction.

Like the Stellantis-LG electric vehicle battery plant, the recent announcement of the General Motors battery materials factory in Quebec confirms that investments in Canadian mines for battery materials also have a future. Together, these facilities could form an integrated value chain for future car and truck electric powertrains.

Electric vehicles differ from gas vehicles because as much as half of the value of an EV is the propulsion battery. As a result, the makers of other vehicle parts will be under pressure to lower costs so that the total price of EVs can compete with established gas models. The push to reduce the cost of parts will increase if governments decide to end EV purchase incentives for consumers.

This dive to the bottom on parts pricing would push our large supplier segment to become commodity providers of inexpensive products, which would drive wages down and could lead to firms moving to lower-cost countries.

As a nation that aspires to be a leader in high-value advanced technology manufacturing, Canada needs to find opportunities to add value to our natural resources and build the highest-value parts of the future car – and that is exactly what an EV battery supply chain does. Without an EV battery-making plant, Canada could be on the fringes or entirely left out of the biggest revolution in the automotive industry since it began a century ago.

Why are EV batteries so expensive? Advanced EV batteries are much larger than conventional car batteries and use chemistry that is completely different from the lead-acid system used in car starter batteries. Mining the lithium, cobalt, nickel, manganese and other minerals used in EV batteries is expensive, and supplies are located far from battery manufacturing and vehicle assembly plants. At present, the major sources of lithium are Australia, Chile, China, Argentina and Portugal, while the biggest source of cobalt is the Democratic Republic of Congo, which produces more than 80 per cent of the world’s supply.

Complexity is another reason for the high cost of EV batteries. A high-performance battery pack consists of many individual cells, which must be connected and housed in a specially designed module or “pack” to protect it in a crash. The module also contains a sophisticated electronic battery management system to ensure that each cell is performing properly and prevent overheating. Because EV batteries will fail prematurely if they are too cold or too hot, they require a complex thermal-management system to keep the pack at the proper temperature for safe, dependable, peak performance.

High battery power output requires a pure chemical mix and accurate robotic processing in clean factories to ensure correct assembly of the pack. If quality is not controlled or impurities contaminate the battery, it will not deliver the designed power level or be as durable, and it could become thermally unstable. Lithium battery fires are dangerous because of the huge amount of energy released and because plain water or even some types of fire extinguishers cannot douse them.

Finally, poor economies of scale are driving up EV battery costs. About 16 million cars and light trucks are built in North America annually but, at present, fewer than 5 per cent are electric or hybrid vehicles and each EV model uses its own battery design. Thus, the production run of a given model is small, which drives up cost.

It also creates a major headache when a replacement battery is needed as only the exact battery to fit that vehicle model will fit. It would be as if each conventional car model required its own specific gasoline. This is clearly unworkable, but that is the situation with EV batteries right now. The four big Japanese motorcycle companies have agreed to standardize battery “formats,” but that type of agreement has not yet come to the car and truck market.

Costs are coming down, but until we can produce critical EV battery-making materials in North America and unless we can achieve economies of scale by increasing EV sales and standardizing battery formats, EV batteries are likely to remain expensive.

That’s why the battery plant and battery-materials factory are so important to the future of the automotive industry in Canada.

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