Pumping hundreds of millions into green technology
Ahmad Bourini, PhD
With the Canadian government shifting towards providing substantial support for electric vehicles (EV), many questions jump to the minds of Canadians regarding the feasibility of these investments, and the effectiveness of the government’s expansion plan to boost the electric cars industry in exchange for gas-powered ones. Do Canadian manufacturers have the potential to make it locally and globally competitive? How serious is the government in supporting the program to cut carbon emissions? What are the potential future indicators for this industry?
To answer these questions, it is necessary to consider the main aspects of the Canadian experience within its context.
Statistics indicate that electric car sales in Canada represent only about three percent of total vehicle sales – a percentage that does not seem sufficient to maintain the continuity and development of this industry. Most Canadians still have reservations about buying an electric car, with many of them convinced that this technology is technically not efficient or suitable to their needs. Canada is a vast country, and the driving distance between one city and the other. You do not want to have to stop for a charge on the way to work on a snowy day. Cold weather reduces battery life, which worsens the scenario.
On the other hand, it seems that developments are growing faster in an unprecedented way in this field. The Federal Government and provinces show stronger intent to go towards changing reality in favor of electric cars. Quebec, which is the second most populous province in Canada, decided that all new cars to be sold will be electric as of early 2035. British Columbia decided to ban gasoline and diesel powered cars starting in 2040. Likewise, countries such as Britain will start the shift in 2030, Sweden in 2030, and the US state of California in 2035.
The most important development in this regard is the decision of both the Canadian Federal Government and the provincial government of Ontario to invest $590 million to help the Canadian giant Ford Motor Company update its plant in Oakville, Ontario, to start manufacturing electric cars. The project, with a total cost of $ 1.8 billion, is likely to create 5,400 jobs for Canadians. Ford also announced that it would produce 40 new electric and hybrid models by 2022.
For its part, Fiat Chrysler Automobiles announced a $ 1.5 billion investment plan at its plant in Windsor, Ontario, to produce electric and hybrid cars from 2025 onwards.
With the passage of time, it became remarkable that these “risky” investments put the Canadian experience to the test. Both Canadian Prime Minister, Justin Trudeau, and Ontario Premier, Doug Ford, pledged that the project would be a strong and serious start towards enabling green technology in this sector. Despite the challenges, especially those posed by Covid-19 pandemic on auto industry in Canada, current estimates indicate that global auto market will contract by 15 percent compared to 2019, while electric car sales are expected to remain at last year’s levels (3 percent of total car sales in Canada).
The biggest stakes for the project lie mainly in the competitiveness associated with technical factors, availability of labor and resources, and production costs. Minister of Innovation, Science and Industry, Navdeep Bains, believes that Canada has unique opportunities to succeed in investing in the electric car industry because it possesses the skilled workforce and long experience in manufacturing vehicles, planes, ships and trains, in addition to the fact that Canadian provinces own an abundance of natural resources that increase their level of competitiveness. These factors help reduce production costs.
According to Minister Bains, Canada could be a world leader in the manufacture of electric cars and batteries if it tapped into its natural resources of minerals such as lithium, cobalt, nickel and aluminum – the main components required in the manufacture of high-efficiency batteries.
In the end, the Canadian government and auto companies in general are aware that the challenges are great. They also seem to believe that the success or failure of investment in electric cars and batteries market during the pandemic that hit the nerve of the local and global economy will have far-reaching effects. More importantly, it will judge the future of investment in the electric car industry for many years to come.