As the climate crisis continues to push countries to take concrete actions to achieve the 2015 Paris Agreement, the electric vehicles (EVs) sector has been put into the spotlight. Could they be the next step of the transition towards a more sustainable way of living? Despite the on-going pandemic, global sales of electric vehicles increased by 43% in 2020.
The International Energy Agency’s Net Zero by 2050 report explains how vital it is to stop the sale of new internal combustion engine cars by 2035 to be able to achieve net-zero emissions by 2050.
Until now, China has been the epicenter of this revolution: offering over a hundred different models of electric vehicles and accounting for 41% of all electric vehicles sold worldwide. In 2020, Europe has jumped on the trend and took the lead in total electric vehicles sales for the first time since 2015. Generous subsidies and punitive legislation were key-elements to take the lead. The United States was a laggard on the trend with a slower growth (only 2% of market share), but President Joe Biden’s administration strongly supports the adoption of electric vehicles and has announced new policies for the United States to take part in the EV revolution. But what is Canada’s place in this global race to become one of the leaders in the EV sector?
Currently, only 3.5% of vehicles sales are electric vehicles in Canada and 46% of those were sold in Quebec. Quebec and British Columbia are the only two provinces that have established zero-emission vehicles (ZEV) standards, which require automakers to be able to offer a certain amount of EVs. Both federal and provincial governments have established financial incentives to push Canadians to transition towards electric vehicles. The Canadian government announced the switch to zero-emission cars to 2035 instead of 2040. A KPMG survey found that seven in 10 Canadians who plan to buy a vehicle within the next five years are likely to buy an EV. The aspects that may have a negative impact are the lack of robust charging infrastructure, battery life and the purchase price.
What is the current situation for Canada’s auto industry?
Canada is one of the world’s top 12 producers of light vehicles, assembling more than 1.4 million vehicles each year. The top brands produced in Canada are: Stellantis, Ford, GM, Honda, and Toyota. Overall, the auto production industry in Canada was in decline for the last 20 years, with automation, technology and globalization changing the face of manufacturing. Between 2000 and 2007, the manufacturing sector lost 278 000 jobs, and another 188 000 jobs caused by the recession mostly in Quebec and Ontario. Car companies shift towards new markets such as China, Mexico, and India, where product demand is increasing, and labor costs are low. Most cars produced in Canada are combustion fueled cars, only three models of electric vehicles are currently made in Canada.
The latest trend of electric vehicles could reverse the decline of Canada’s auto industry. New investments from government and car companies open the road for electrification. In Ontario, the provincial government will spend about 1.8 billion dollars to produce five battery-powered car models in four years. Stellantis invested 1.5 billion dollars to create an EV in Ontario as well.
The main challenge for the Canadian EV market is to develop the supply chain for the main components: batteries, electric motors, control unit and wiring harnesses.
Canada has the Resources advantage
Canada is rich in lithium, graphite, nickel, cobalt, aluminum and manganese, all key ingredients for the electric vehicle battery manufacturing sector. Experts in the renewable energy sector have all stated the importance of capitalizing on Canada’s potential access to minerals and metals in the race for the EV revolution. But there is little ability in Canada to process all the raw material into components that go into producing batteries, that is why the Canada-U.S. cooperation is very much essential for North America to become a hub of EV production.
With President Biden’s commitment to build up to 500 000 EV charging stations throughout the country, the message is clear: the future is electric in the United States. Biden plans to rely on ally countries such as Canada to supply the metals needed and to process them in-house. Currently 70% of battery production occurs in China, therefore creating a North American hub of battery production could increase competitiveness and decrease the dependency on the Chinese market.
What should the mining industry expect in the following years?
As the mining industry will see new opportunities rising with higher demand in metals and minerals, those opportunities will see the day only with support from governments and a concrete plan, ahead of competitors.
If Canada wants to be a top supplier, the mining industry should already start investing in building new mines, developing mining innovations and working more efficiently and in respect of the environment. As a metals supplier for EVs, Canada has real potential to become a leader: essential battery minerals are found in Canada, an established mining industry and clean energy resources are available.
In conclusion, decarbonization of urban mobility offers a great opportunity to Canada, that has all the ingredients to be a leader, to innovate and to revive its auto manufacturing sector and mining sector.