Canada has what it takes to change into a world EV powerhouse. However to maintain up with the competitors, we should leverage our wealth of sources, from clear energy to expert staff and sustainably produced crucial minerals.
Deal after Deal
Canada’s record of achievements is noteworthy: launching the nation’s first full-scale electrical car meeting plant, touchdown a trio of extremely sought-after EV battery gigafactories from Volkswagen, Stellantis/LG, and Northvolt, and being thought-about by Honda for an $18-billion EV plant. It’s clear to anybody watching that Canada is trying to earn itself a spot within the international clear financial system as a producer of the high-value automobiles of the long run.
For about two years now, senior federal and provincial officers have stood alongside trade to announce what seems like funding after funding, whether or not for a uncommon earth minerals R&D plant in Saskatchewan, a battery enclosure plant in Southwestern Ontario, or a battery cathode facility within the rising battery hotbed of Becancour, Quebec. All in all, investments in Canada’s EV sector have added as much as a whopping $37.4 billion—$30 billion of that added in simply the final two years. Extra impressively, this quintupling of investments between 2021 and as we speak has occurred inside a broader auto trade that was in any other case in decline.
The passion from traders, which embrace main overseas and home heavy-hitters like Magna, in addition to federal and provincial governments, is well-founded. In 2022, Bloomberg moved Canada up three spots—from fifth to second place in its international rating of nations’ total lithium-ion EV battery provide chain potential, citing, partially, our mineral sources and enormous hydropower capability along with different aggressive elements. Throughout the rating’s 5 key themes and out of 30 main nations, Canada was ranked third for entry to key uncooked supplies; fourth for infrastructure, innovation, and trade; sixth for environmental, social, and company governance issues; eighth for the manufacturing of battery cells and elements; and tenth for native EV and power storage demand—the one nation to land in a top-ten spot throughout all 5 themes (a feat unmatched even by China, the world’s unequivocal chief in battery manufacturing). This yr, Canada dethroned China because the world’s most promising EV battery-making vacation spot—the primary of any nation to take action within the historical past of Bloomberg’s rating—because of constant manufacturing and manufacturing advances and coverage follow-throughs made since.
And it’s potential that, if realized, may help 250,000 direct and oblique jobs by 2030 and add $48 billion in GDP yearly, in response to a 2022 report from Clear Power Canada and the Trillium Community for Superior Manufacturing. Thankfully, our timing might be good: Almost all of the enabling circumstances Canada must succeed are there, together with international and home demand for EVs and a supportive commerce and local weather coverage setting throughout the continent.
The Taking part in Subject for EVs in Canada
In the present day, EVs already make up 14% of all new automobiles bought globally, whereas 12% of latest automobiles bought in Canada in 2023 had been electrical. In sure Canadian provinces, particularly B.C. and Quebec, it’s nearer to one in 4. What’s extra, battery-electric automobiles, particularly, have already handed their essential tipping level of 5% of latest car gross sales in 31 nations, a pivotal level after which nations can anticipate quickly accelerating uptake en path to mass adoption.
Certainly, international gross sales of all passenger zero-emission automobiles have been rising exponentially, averaging an annual development charge of 65% between 2018 and 2022—making it the one key driver of the power transition on monitor to satisfy its 2030 goal for limiting international warming to the agreed goal of 1.5 levels, in response to a World Assets Institute report.
And with a protectionist “Purchase North American” provision within the US’ sweeping Inflation Discount Act, which requires EVs to make use of a share of North American supplies of their batteries to qualify for its US$7,500 EV client tax credit score, Canada has now additionally been given preferential entry to provide battery minerals, supplies, and elements to the world’s largest auto market. Briefly, the demand for electrical automobiles is there and rising. The query is whether or not now we have the suitable insurance policies in place to help a fledgling new battery sector—and for probably the most half, we do.
Since 2022, Canada has unveiled a set of insurance policies that help its EV battery ambitions. That features the nation’s first-ever Important Minerals Technique, backed by $3.8 billion in federal help to extend the world’s provide of accountable, Canadian-sourced minerals; a draft of the proposed Clear Electrical energy Laws that might see electrical energy grids throughout the nation attain net-zero emissions by 2035, making certain our clear energy benefit far into the long run; and, extra not too long ago, a nation-wide EV Availability Normal that may require automakers to promote 100% zero-emission passenger automobiles by 2035, a transfer that would enhance home EV demand whereas making certain a wholesome provide of inexpensive EVs for Canadians trying to go electrical (whether or not for the setting or to get monetary savings). The latter can be a confirmed coverage that each of the nation’s main EV provinces and 17 U.S. states have efficiently adopted.
With a number of main initiatives within the pipeline and a coverage setting that acknowledges the size of the chance, Canada is off to an encouraging begin. However to understand our full battery provide chain potential—together with the roles and financial advantages they convey—amid rising international competitors, there are nonetheless a number of challenges we have to handle.
Gradual Allowing, Stiff Competitors, and Different Challenges
For one, Canada just isn’t recognized for making fast choices. Our slower allowing and affect evaluation processes have—and will certainly proceed to—deter firms trying to scale up shortly from investing right here.
One other problem Canada faces is fierce competitors with international industrial powers, just like the US and China, for main investments. China’s batteries are actually as low cost as they get, and realistically, Canada will doubtless not have the ability to compete on value. And the US, with its beneficiant cleantech tax credit and large home auto market, may additionally show tough for traders to withstand (although a 2024 US election introduces some uncertainty).
Canada’s ample clear electrical energy—a bonus that neither the US nor China presently must leverage—is a card that Canada ought to proceed to play. In reality, information releases from each single firm that Canada landed a serious funding from—together with Umicore, GM/Posco, VW, and Northvolt—explicitly spotlight the nation’s “clear,” “renewable,” or “low-carbon” power as having been a giant draw of their funding choice.
However to carry onto considered one of its greatest aggressive benefits, Canada should guarantee its electrical energy provide stays clear and ample into the long run, together with as residential customers undertake cleaner heating and transport applied sciences like EVs and warmth pumps.
Ontario already bought a style of what poor power planning may end in when it misplaced out on a $2.5-billion plant from LG Chem that might have introduced as much as 1,500 to the area. The explanation: not having sufficient electrical energy. In the meantime, Quebec—presently chargeable for producing one-third of the nation’s whole electrical energy provide—has equally warned that it’s going to run out of surplus electrical energy come 2027.
Lastly, regardless of Canada’s mineral useful resource wealth, only a few of Canada’s metals and minerals are literally making their means into batteries proper now. Many new mines and related infrastructure must be developed if Canada needs to seize any important EV battery mineral market share by 2030. Whereas there are some indicators of motion, just like the federal authorities’s $3.8-billion Important Minerals Technique and 30% crucial mineral exploration tax credit score, if Canadian governments need to seize the battery mineral alternative, they should choose up the tempo. Growing the up- and mid-stream elements of the battery provide chain is vital to spreading out the financial advantages throughout the nation, comparable to to Indigenous communities in our mineral-rich North, past simply these in Canada’s conventional manufacturing hotspots Ontario, Quebec, and Manitoba. It is usually essential to keep away from future bottlenecks, just like the pandemic-related provide chain snarls that hit Canada significantly exhausting in comparison with its North American friends.
In fact, a Canadian battery provide chain can even require staff from begin to end. Whereas Canada is dwelling to an enormous and extremely expert workforce, varied industries have been struggling to fill jobs left by retiring child boomers.
Lastly, Canada is a world chief in battery analysis and innovation, with spectacular EV analysis centres dotted close to its industrial centre, in addition to one as far out as Nova Scotia. However as we proceed to embrace overseas funding, for which we had been ranked third within the OCED within the first quarter of 2023, our governments should not neglect to additionally spend money on its homegrown firms within the sector, like BC-based Nano One Supplies, Ontario-based battery recycler Li-Cycle, and plenty of others.
What’s Subsequent for Canada
As Canada heads to section two of its battery trade constructing efforts, it ought to deal with clearing bottlenecks and staying aggressive. Step one is dashing up its allowing course of.
Overview processes for permits and affect assessments have to be made extra predictable and environment friendly throughout the battery provide chain—whether or not it’s for the opening of a brand new mine or a brand new battery recycling plant—if Canada needs to unlock its battery minerals and supplies wealth and maintain highly-sought investments from flowing south or elsewhere. And it should accomplish that with significant Indigenous participation and consent whereas retaining with its excessive ESG requirements—a power that needs to be embraced.
Second, Canada ought to finalize its proposed Clear Expertise Manufacturing funding tax credit—a measure that might assist incentivize firms trying to spend money on Canada’s battery provide chain whereas aiding in competitors with comparable measures supplied within the US.
The exhausting lesson realized in Ontario was that, along with retaining the nation’s electrical energy grids clear, we additionally should be rising them. Constructing out Canada’s clear electrical energy capability will assist make sure the nation can proceed saying sure to wash investments, bringing jobs to Canadians and driving the long run financial system. And as for what kind of era, a current Clear Power Canada examine discovered that electrical energy from wind and photo voltaic are already among the many most cost-effective to supply and are set to get cheaper, even when battery prices are included. The selection needs to be straightforward.
Shifting ahead, we additionally have to ensure that now we have the suitable staff with the suitable expertise in the suitable locations. We are able to accomplish that by discovering methods to mobilize and put together staff for a profitable future within the EV and battery trade, comparable to by EV-focused school coaching applications, of which there are already a number of.
Final however not least, Canada also needs to spend money on its homegrown battery leaders that want funding to scale up. If Canada can succeed in any respect these steps, we can have a spot on the worldwide stage as a frontrunner in EVs.
This publish was co-authored by Sicellia Tsui and initially appeared in TheFutureEconomy.ca.