Ottawa wants more electric vehicle manufacturing in Canada. What will it take?

For Canada’s auto sector, the news is coming in fast and furious. On Sunday, the federal government reportedly offered up to half a billion dollars to attract electric vehicle (EV) manufacturing to Ontario. By Tuesday, Ford reached a tentative deal with Unifor to invest nearly $2 billion into the production of five EVs in Oakville.

And while the money has been described as a lifeline for auto workers, it signals much more than that.

Ottawa now seems intent on attracting EV manufacturing to Canada, a sentiment echoed by Minister of Innovation, Science and Industry Navdeep Bains, who recently championed Canada as a strategic destination for EV production, given our endowment of the metals and minerals needed to make batteries.

We’ll no doubt hear signals again in Wednesday’s throne speech. So it’s fair to wonder: if Canada does wish to turn itself into an EV-manufacturing hotspot, what will that take?

This isn’t just green virtue signalling, but rather an industrial imperative. With EV adoption accelerating and countries announcing future bans on the sale of fossil-fuel-powered cars (the U.K. is now said to be moving its 2040 ban forward to 2030), our struggling auto sector faces a precipice — unless we build a bridge.

A bridge that allows Canada to catch up to countries like China, the U.K., Germany and South Korea, all well on their way to EV-manufacturing dominance.

For inspiration, Canada can look to another competitively positioned jurisdiction. California has used regulations and rebates to become North America’s EV leader, while simultaneously supporting the development of an EV auto sector to meet growing demand. Today, the state is home to 275,600 EV-related jobs. Electric vehicles are its eighth-most-valuable export.

By contrast, Canadians drive the most emissions-intensive cars in the world, according to the International Energy Agency. Yes, we literally take the top spot. Over the past 20 years, pollution from transportation has grown by nearly 30 per cent.

At the same time, Canada’s vehicle manufacturing fell by 37 per cent. Once a top-five vehicle manufacturer, we now don’t even crack the top ten.

While many factors are at play, the cars we build and the cars we drive are not unrelated.

Yet most Canadians lean toward an EV for their next vehicle purchase, according to a 2019 survey; 71 per cent predict a shift to electric cars will happen within 15 years. The problem? Most car dealerships in the country don’t have a single EV available to test drive or purchase. A 2020 Transport Canada study found that waitlists of three to six months are typical.

At present, if you want to buy both electric and Canadian-made, you’re limited to a single option: the Chrysler Pacifica plug-in hybrid minivan.

There have been bright spots, however.

Quebec’s Lion Electric is selling electric trucks to CN and Amazon and is North America’s largest producer of electric school buses. Warren Buffet-backed BYD is manufacturing electric buses in Ontario, delivering them to the Toronto Transit Commission, now home to North America’s largest battery electric fleet. And Canada’s auto parts manufacturers are also pivoting to EVs, leading the charge on a zero-emission concept car to showcase what Canada can do.

And yet a recent analysis of 29 global automakers, which identified $300 billion (U.S.) flowing into EV development, found not a single dollar was destined for Canada.

It’s time Canada took the wheel. Already, government action this week appears to have helped bring EV jobs to Ontario. An innovative industrial strategy for the auto sector is key, but insufficient on its own.

A zero-emission vehicle standard requiring automakers to sell more EVs in the country would create market certainty for automakers and supply certainty for consumers, while stricter vehicle pollution regulations, continued rebates and charging stations all help support an electric ecosystem. As we’ve seen in California and with buses in Canada, there’s a relationship between what you build and what you buy.

Done right, Canada can overcome its car conundrum while achieving a trifecta of outcomes: cutting transportation pollution, giving Canadians better access to the cars they want, and retooling our auto sector to compete in the 21st century.

This post was co-authored by Sarah Petrevan and originally appeared in the Toronto Star.

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