Pick a Lane: Canada and the EV Opportunity
Canada is home to one of the world’s largest automotive manufacturing sectors. It’s a globally recognized leader in mining, mining finance, and metallurgical engineering. And it has an abundance of clean power and hydrogen. As such, it has the opportunity to play a major role in the rapidly expanding global electric vehicle sector, which has seen a sharp escalation in consumer acceptance, sales and large-scale investment since the beginning of the pandemic.
The drivers of the EV market are clear: the global imperative to sharply reduce carbon, and in particular carbon tied to transportation and mobility; dramatic improvements in the performance and range of EVs; and a growing consensus that internal combustion engines will be phased out in the latter half of the 2030s.
Since the signing of the Canada-U.S. Auto Pact in 1965, Canada’s automotive manufacturing sector has given birth to globally competitive Tier 1 suppliers, attracted foreign direct investment and vehicle production mandates, and spurred the development of a highly trained labour force that extends across the advanced manufacturing value chain, from technicians to product engineers. Some companies in this sector — though not all — will have the opportunity to pivot to the production of EVs and EV components.
At the same time, Canadian and global miners, as well as the professional services sectors that support them, have a similarly important opportunity to take advantage of key mineral and hydroelectric resources to bring critical metals used in EV batteries to market.
Finally, Canada’s cleantech and clean energy startups and their investors should be looking to the global EV market as a target for new forms of clean mobility innovation, including those that leverage our leadership in artificial intelligence.
Despite the fact that the EV market will expand dramatically over the next two decades, the window of opportunity for Canada is narrow. China already has a dominant position in several segments of the EV value chain, such as buses and rare-earth mineral processing, while vertically integrated EV leaders like Tesla are investing on a global, as opposed to continental, scale.
Meanwhile, policy-makers face tough problems: How to secure access to the U.S. market in the face of protectionism? How to allocate public resources to ensure that Canada remains an attractive place for foreign direct investment by EV firms and suppliers? And how to create the conditions that will allow Canada to be an exporter of EV technology, not just an importer?
In short, Canada must determine what its post-2035 automotive sector is going to look like. What are we going to be good at?
The automotive sector’s contribution to the Canadian economy in 2020
309 million EV chargers
Required globally by 2040
3.2 million tonnes
Canadian reserves of cobalt, lithium and nickel, key minerals driving the EV sector