Electric vehicles (EVs) are the transportation revolution that’s here to stay, but Canada needs to kick it into a higher gear quickly to keep up.
“If we want our nation to be a global EV leader, we must have bold ideas and actions,” said Romel Mostafa, Director, Ivey’s Lawrence National Centre for Policy and Management (LNC).
This was the prevailing theme at a recent Ivey Idea Forum focused on the growth, and opportunities, of Canada’s EV industry. Hosted by the LNC, and moderated by Ivey’s Associate Dean of Research Gal Raz, the forum brought together leading EV sector experts including Meena Bibra, Senior Policy Advisor, Clean Energy Canada; Brian Kingston, President & CEO, Canadian Vehicle Manufacturer Association; and Colin Singh Dhillon, Chief Technical Officer, Automotive Parts Manufacturers Association (APMA).
With 22 per cent of Canada’s emissions coming from transportation sources, the switch to EVs is essential for the country to meet its 40 per cent GHG emission reduction target from 2005 levels by 2030.
However, as of last year, only 9.4 per cent of new vehicles sold in Canada were EVs, well below ambitious targets set by the Canadian government. Those targets require that 20 per cent of all new domestic vehicle sales must be EVs by 2026, 60 per cent by 2030, and 100 per cent by 2035.
With this in mind, the Idea Forum examined how Canada must move forward to meet these targets, while also building a competitive advantage across the supply chain
“Canada’s automotive sector has many advantages including integrated manufacturing, large trained workforce, geographically strategic manufacturing hub in Ontario, and the ability to attract large scale investment in both EV battery production and manufacturing,” said Raz.
Norway leads the way
The clear world leader in EV adoption is Norway, which like Canada, is also a major producer and exporter of oil. More than 80 per cent of new vehicles sold in this Scandinavian country are EVs. Through a series of incentives and infrastructure development, Norway has managed to sway public confidence towards green transportation.
Norway has incorporated multiple dimensions of tax incentives for purchasing EVs, but also smaller, convenience initiatives for EV owners such as eliminating charges on toll roads, free municipal parking, access to bus lanes, and charging rights for people living in apartment buildings.
While Canada has a long way to go to reach Norway’s level of adoption, Bibra of Clean Energy Canada is optimistic, despite many challenges ahead.
“Canada has reached itself at what we call a tipping point,” she said. Once you pass that tipping point, then you start accelerating the commercial adoption of these vehicles.”
BC and Quebec pacing demand
While Canada’s EV adoption has been slower compared to leading jurisdictions, both British Columbia and Quebec are emerging as EV policy leaders. Currently, one-in-five vehicles sold in each province are EVs.
According to Bibra, the top issue stifling consumer demand is wait times for vehicles, stemming from limited vehicle supply.
“We have a tale of two Canadas,” she said. “In BC and Quebec there are certain regulatory policies that are attracting 70 per cent of the supply of EVs.”
Both provinces have created incentives which reduce the upfront cost of EV vehicles and have worked to build up significant charging infrastructure.
“They [BC and Quebec] have done a great job at building infrastructure and providing incentives,” said Kingston. “When you address those two barriers, people demand the vehicle and the dealership will have the vehicle… The way a dealership works is you stock the vehicles that you know you can turn over quickly. The last thing a dealership wants to do is to have a vehicle there for months and months.”
While various supply chain bottlenecks related to semi-conductor and battery production remain, the industry isn’t yet back to pre-COVID production. However, in the end, Kingston suggests, “if you drive the demand the supply will come.”
Technological revolution in manufacturing
In his role as Chief Technology Officer at the APMA, Dhillon has helped spearhead Canada’s first domestically sourced and built EV called Project Arrow. “In 2019, there were zero dollars of investments in EVs in Canada, and we were concerned.” According to Dhillon, the Project Arrow demonstrated that Canada possessed the key capabilities to develop an EV car, ushering in investments in this sector recently.
“We somehow don’t have a culture in Canada of generating our own Teslas and General Motors. I would like to have more Nortels and more Blackberries and more Shopifys where we can.”
As EV components become more technology based, incorporating both advancements in software and hardware, Dhillon points to the labour force as a core advantage for Canada. “It’s the conversations academic institutions have with industry to make sure they’re refining what they’re teaching. I think these are all key, and I think Canada always has those pieces.”
Race is on for critical minerals
Canada is one of the few Western economies rich in the critical minerals, such as cobalt, graphite, lithium and nickel, needed to meet the demand for EV batteries. While there is an abundance of raw material sitting in the ground, getting it out remains a persistent hurdle.
When discussing the raw material side, Raz questioned the length of the permit process for mining in Canada. “While the federal government is looking to streamline the process, it can still take between 10 and 20 years to receive a mining permit in Canada. Other jurisdictions, such as Australia, have permitting processes which often only takes as little as two years”.
“The most significant challenge in the Canadian permitting process is that we have multiple levels of government that tend to duplicate approvals,” said Kingston.
Echoing the other two panelists, Bibra notes that Canada needs to act swiftly and responsibly to develop mining and processing of critical minerals to take advantage of the recently introduced Inflation Reduction Act in the United States.
“The Inflation Reduction Act is effectively trying to create a North American supply chain for batteries, and ultimately reduce our dependence on China which dominates the supply chain,” said Kingston.
“The challenge for us to sustain this opportunity is to make sure cities like Timmins, Sudbury and North Bay are doing more than just extracting, but they are potentially processing,” said Dhillon. “This time we have to be more strategic and definitely speed up the process.”
The federal government is being encouraged to move quickly, as countries are looking to make side-deals with the United States for the coveted critical minerals.
“If we don’t move with the speed required, there will be other countries that will step up and say ‘we will produce and provide into the U.S. market,’” said Kingston.
Ivey policy paper competition
The Idea Forum kicked off a student competition to spur ideas to help Canada enhance it competitive advantage to become a global EV leader, led by Professors Raz and Mostafa. Several student teams across Ivey’s HBA, MSc and MBA programs are participating in this competition. The top three teams will receive cash prizes and the winners will be recognized at the Ivey 100 Symposium in November.