Written By: Shelby Deegan
Edited By: Justin Weir
The export of minerals and raw materials has long been commonplace in Canada. Exported materials are implemented into the manufacturing processes of foreign countries, generating high-value goods.[1] Through this supply chain, Canada loses out on the opportunity to fuel its economy by performing these processes at home. With more than 130 countries having set or considering setting a target of reducing emissions to net zero by 2050 — including legally binding targets in Japan, Canada, and the EU — there is a rapidly growing demand for battery-reliant electric vehicles (EVs).[2] A 2021 KPMG survey of global auto executives found that virtually all respondents expect the market share of EVs to grow significantly by 2030, with some predicting growth even greater than 50%.[4] Given these projections, Canada finds itself in a unique position to become a global leader in all segments of EV battery production — which is projected to add a possible $48 billion to the Canadian economy.[1],[3]
There are five segments of the EV supply chain: mining and mineral processing, cathode and anode manufacturing and chemical precursors, battery manufacturing, vehicle manufacturing and parts supply, and battery recycling.[3] Canada has advantages which make it well-positioned to become a global leader in all five areas. Most notably, Canada is the only country in the Western hemisphere with all the critical minerals required to manufacture EV batteries.[3] With Canada’s skilled workforce, proximity to the US market, established manufacturers and suppliers, and government support, it has all the tools needed to rise to a prominent position in the valuable EV auto industry.
Multinational automotive manufacturing company Stellantis is making strides to tap into the potential EV market. Stellantis owns notable auto manufacturers such as Chrysler, Dodge, Jeep, and many others. The company has announced their plans to invest $3.6 billion into upgrades of two of their assembly plants.[4] Both plants are located in Ontario — one is in Windsor, and the other in Brampton. The company’s stated goal for the Windsor plant is to “diversify its ability to introduce battery-electric or hybrid models to the production line to meet [...] growing demand for low-emissions vehicles”.[5] The Brampton plant’s upgrade ensures that its assembly line can produce battery-electric as well as hybrid vehicles.[5] Additionally, Stellantis is building two new research and development (R&D) facilities that will focus mainly on developing advanced battery and EV production strategies.[5] In total, Stellantis is investing $6 billion into scaling up the EV industry in Ontario — and these advancements are expected to create 650 jobs in the province.[5]
Another Canadian advantage is the government’s willingness to support the EV industry.[4] For the Stellantis project, Ontario has committed to funding up to $287 million for the renovation of the Windsor plant, as well as $132 million for the Brampton plant and $94 million for the creation of the R&D centers.[5]
Another portion of this investment is going towards a joint venture between Stellantis and Korean-based LG Energy Solutions, one of the world’s largest battery makers. The partnership will result in the construction of Canada’s first lithium-ion EV battery manufacturing plant, in Windsor, Ontario.[6] This location is advantageous due to both its proximity to Stellantis’ existing manufacturing plant in Windsor, as well as proximity to the US auto market — directly across the US-Canada border lies Detroit.[6] Canada’s access to the US market is further aided by the Canada-United States-Mexico trade agreement, which removed tariffs on motor vehicles between Canada and the US.[3] The plant is set to be operational in 2024, and is projected to create 2,500 jobs in the region.[6] In addition to direct jobs, the battery plant could generate up to 10,000 ‘spin-off’ jobs. This term refers to jobs that are created from adjacent and inter-reliant economic activity — charging stations, supply chain partners for electronic components, battery molds, research and development for the industry, transportation, and many other sectors that will grow as a result of the plant.[5]
This potential for job creation places Canada in an advantageous position once again. Geographically, Canada’s key competitor in the industry will be the US. Currently, the US — along with the rest of North America — faces labor shortages. However, Canada’s immigration policies give it an advantage in filling the huge number of direct and spin-off jobs which are to be created with the growth of the EV industry.[6] In 2021, the US welcomed only 244,000 new residents from immigration, while Canada welcomed more than 405,000 new permanent residents.[4] Additionally, projected population growth in key manufacturing areas within Canada are expected to expand 2.5 times that which the US will see, solidifying Canada’s advantage in North America.[4] Furthermore, to help fill skilled positions, Canada’s Global Skills Strategy program allows employers to bring in highly-skilled talent from abroad as quickly as within two weeks.[3]
Canada also has advantages over other main competitors in Asia. Although Asia is the current site of most lithium-ion battery production, it is highly probable that a shift will occur in the coming years. Within the next few years, suppliers to auto original equipment manufacturers (OEMs) will be required to meet environmental, social, and governance (ESG) standards.[4] Once these regulations are implemented, Canadian-produced batteries will have an advantage over those produced in Asia, where ESG standards are less likely to be met. The demand for ethically-sourced materials may even help create jobs in remote Northern communities, where they are especially needed — bettering Canada in more ways than one.[4]
Along with access to materials, government support, ethics standards, and a skilled workforce, There are also economic incentives designed to promote and support the EV industry in Canada. For example, the Net Zero Accelerator fund, which is part of the Strategic Innovation Fund, allocates $8 billion over seven years to aid decarbonization projects such as EV production.[4] Meanwhile, the Scientific Research and Experimental Development program provides income-tax credits and refunds for expenditures on R&D activity in Canada.[4]
Altogether, Canada’s access to materials, government support, ethics standards, skilled workforce, and economic incentives demonstrates Canada’s latent potential to become a leader in EV production on the global stage. Compounded, these factors give Canada an opportunity to expand the economy and generate jobs, while simultaneously contributing to global efforts aimed at countering climate change. Companies such as Stellantis are leading the charge in the industry, which should soon bring a mass of global investments. Canadian residents — especially those with interest in careers in the EV industry — have well-founded reason to be optimistic for the future.
_________________________________________________________________
References:
[1] Pittis, Don. “Canada Can Build an Electric Vehicle Industry Worth $48B a Year - but It Must Act Now: Report .” CBC news. CBC, September 14, 2022. https://www.cbc.ca/news/business/north-america-ev-tax-break-column-don-pittis-1.6580997.
[2] Carver, Dominic. “Global Net Zero Commitments .” House of Commons Library , November 12, 2021. https://commonslibrary.parliament.uk/global-net-zero-commitments/.
[3] “EV Supply Chain.” Invest in Canada, June 1, 2021. https://www.investcanada.ca/industries/batteries-and-electric-vehicles-ev.
[4] “Stellantis Plants in Windsor, Brampton in Ontario to Get $3.6B in Upgrades for EV Production.” CBC news. CBC, May 2, 2022. https://www.cbc.ca/news/canada/windsor/prime-minister-ontario-premier-stellantis-windsor-announcement-1.6437954.
[5] La Grassa , Jennifer. “Electric Vehicle Battery Plant Set for Windsor, Ont., Signals Canada Is a 'Player' in Auto Industry's Future .” CBC News. CBC, March 24, 2022. https://www.cbc.ca/news/canada/windsor/electric-vehicle-battery-plant-windsor-1.6394444.
[6] Isai, Vjosa. “Canada Aims to Add 1.45 Million Immigrants by 2025”. The New York Times, November 1, 2022. https://www.nytimes.com/2022/11/01/world/canada/canada-immigrants.html.
Comments