The Canadian government held talks with Tesla last week at the company’s Markham, Ont. facility, pitching Canada as an investment destination that would help the electric vehicle maker green its supply chain.
François-Philippe Champagne, minister of innovation, science and industry, met with Tesla officials Aug. 17 in what his office called early-stage discussions. The department would not disclose what type of operation the U.S.-based company may be considering for Canada or with whom Champagne met.
The industry minister’s stop at Tesla Toronto Automation, which has operations north of Toronto in both Markham and neighbouring Richmond Hill, follows recent changes to the company’s lobbying efforts in Ontario that signal new priorities for the automaker in Canada.
Last month, an amended filing with the Ontario Office of the Integrity Commissioner showed Tesla had begun lobbying the province for reforms to industrial permitting processes, as well as for adjustments to provincial incentive programs “that could further increase the attractiveness of Ontario for industrial and/or advanced manufacturing investment.”
The Ontario ministry of economic development, job creation and trade would not say if it has held talks with Tesla.
“Currently, there are a number of companies looking at Ontario to set up shop for their next major investment, and we continue to work with these companies as they explore,” said Vanessa De Matteis, spokeswoman for minister Vic Fedeli.
Tesla gained a manufacturing footprint in Canada with its 2019 acquisition of Richmond Hill-based Hibar Systems Ltd. It opened an additional plant that builds battery components in Markham last year.
The company has other ties to Canada. Tesla collaborates with battery researcher Jeff Dahn of Dalhousie University in Halifax, funding much of his group’s research. It sources parts from Canadian suppliers such as Martinrea International Inc., and recently disclosed a supply deal with mining firm Vale, which is providing Canadian-mined nickel for use in its vehicle’s batteries.
Tesla CEO Elon Musk also recently singled out Canada as a possible investment destination, though the comments were made at least partially in jest.
MUSK: 'MAYBE I SHOULD' CHOOSE CANADA
During a shareholder meeting Aug. 5, Musk said Tesla “might be able to announce another factory location later this year.” He then prompted the crowd to shout out prospective locations. “We got a lot of Canadas,” he said as responses echoed through the room. “I am half Canadian, so maybe I should.”
Tesla did not return request for comment.
According to Sam Fiorani, vice-president of U.S.-based global vehicle forecasting at AutoForecast Solutions, Tesla has provided no firm direction on a location for its next North American plant, but is likely to need one sooner rather than later if its “staggering” growth is to continue.
“At the current rate, Tesla growth in North America will begin to taper in just a couple of years as their factories approach production limits. Adding another plant would provide the capacity necessary to top one million units of sales in North America.”
Tesla’s primary considerations in siting a new plant will likely be volume and affordability, Fiorani added, and recent changes to how Canadian governments handle incentives could attract the automaker’s attention.
“Canada has to be in the running. The Canadian government has stepped up and decided to fund new companies coming in there and new projects. This is something they hadn’t done in the past and they lost a lot of business because of it.”
Yet Canada is also a long way from Tesla’s current base of operations in Texas and California, Fiorani warned. If the company were to set up a vehicle assembly plant, it would also need a battery plant in the region, he said.
'TOE IN THE WATER'
Tesla’s growing familiarity with Canada through its automation plants likely counts for something as well, said Brendan Sweeney, managing director of the Trillium Network for Advanced Manufacturing, which advocates on behalf of Ontario’s manufacturing sector.
“They’ve got a toe in the water … that has probably given them a bit of insight into what doing business is like in Ontario,” Sweeney said. The province’s existing automotive supply base, clean power grid, experienced labour pool and availability of large industrial sites could also be resonating with Tesla, he added.
But what the automaker is looking to build remains to be seen, Sweeney said. An “advanced manufacturing” facility, as indicated in its updated lobbyist filing, could include any of Tesla’s operations — from auto assembly and battery manufacturing, to parts production or engineering research — he said.
Nevertheless, any added Tesla footprint would be a win for Ontario, Sweeney said
“We had our gamechanger in March with the battery plant [in Windsor], this would be gamechanger-plus.”