Only a couple of years ago, the looming shift away from gasoline-powered cars and trucks to electric ones posed a mortal threat to Canada’s auto sector. This country had yet to land a single EV manufacturing commitment, and there was no guarantee it ever would.
By this Christmas season, when the federal government unveiled its plan to require all personal vehicle sales to be electric by 2035 – a target shared with the European Union and a group of U.S. states led by California – that threat is looking more like a boon for Canadian industry.
Ottawa can take some credit for that, after successfully pursuing a series of major EV-making commitments that at a minimum mean Canada will keep a piece of the pie. So, too, can its provincial counterparts in Ontario and (to a lesser extent) Quebec, where those investments have landed.
The refrain from governments is that Canada is uniquely positioned – because of a combination of natural resources, and manufacturing infrastructure and expertise – to build a full EV supply chain, from the mining of battery minerals through to vehicle assembly.
The good news has mostly come on the manufacturing end. North American auto makers with long histories in Ontario’s industrial heartland have all committed to assembling EVs there, and Stellantis NV (Chrysler’s parent company) is also partnering with South Korea’s LG Energy Solution on a $5-billion battery factory in Windsor.
The Volkswagen Group is leaning toward a Canadian site for its first North American battery plant, which would make it the first major auto maker to set up shop here since the 1980s. None of this was assured, especially when competing for investments with the increasingly protectionist U.S., where most Canadian-made vehicles are exported.
Canadian politicians and industry representatives scored a big win by convincing U.S. President Joe Biden’s administration to turn made-in-America provisions for new EV purchase rebates into made-in-North America ones. And they’ve clearly made a compelling case for Canadian advantages, including existing manufacturing infrastructure and skilled workers. They’ve also proven more willing than previously to match U.S. subsidies to manufacturers.
They need to turn the same degree of focus to a more daunting task: capitalizing on Canada’s reserves of raw materials for batteries, such as lithium, cobalt and graphite. Canada’s track record is not encouraging, with its notoriously long delay to get mining projects off the ground.
The biggest culprit, which Ottawa acknowledged in launching a new critical minerals strategy earlier this month, is extraordinarily slow regulatory approvals. It’s a delicate subject, because due regard for environmental protections, Indigenous rights and other ethical considerations is part of Canada’s pitch. Ottawa and the provinces should co-operate on producing a single review for each proposal rather than running concurrent ones, and on setting firm timelines for each decision. Surely, an ESG commitment isn’t measured by the number of years spent deliberating.
Nor is there need to launch an endless process to fix the process. Regulatory problems are so well documented that, if minerals are the priority that governments claim, changes should be possible in a matter of months.
Last April, Ottawa proposed a 30-per-cent exploration credit for critical minerals. The federal government needs to determine if further tax measures are needed to compete with the array of mining incentives that the U.S. has recently advanced and, if so, have those ready for the next budget.
Governments also need to prioritize projects where they can help get infrastructure built quickly. It may be time, for instance, to set aside dreams of developing the Ring of Fire – a mineral-rich but remote corner of northern Ontario that has occupied attention for a decade without any progress – to devote resources on more accessible reserves.
Auto makers committing to Canada are ready customers for domestically sourced minerals, helping to lower the risk of mining investments. Some have even started partnering on refineries to process them, with the Quebec town of Becancour, for instance, suddenly emerging as a hub.
But their faith needs to be swiftly rewarded to avoid that sort of investment drying up.