The Ontario government has laid out a new roadmap for steering electric vehicle assembly and battery production toward the province, even as Democrats in the United States debate a proposed tax credit that could derail any Canadian momentum in the growing EV market.
Premier Doug Ford said his government’s latest auto plan looks to keep Ontario automakers and parts suppliers a step ahead of their global competitors on electric and autonomous technologies while encouraging battery makers to set up shop in Canada’s automotive heartland.
“We have the supply chain in place, we have geographic advantages and we’re blessed with the mineral resources to make the batteries that these in-demand new cars will need,” he said at a press conference in Guelph, Ont. Wednesday.
As part of the plan, the province aims to lock in new EV and hybrid products for existing vehicle plants, as well as coax another automaker into building an entirely new assembly site in Ontario. The province said it is also working to secure two or three battery plants to anchor its EV supply chain, which would extend from mineral extraction in Northern Ontario to bolting finished batteries to vehicle chassis at facilities in the southern part of the province.
Ontario has had some early success on landing electrified products for its assembly sites. Ford Motor Co., General Motors and Stellantis have all committed to building EVs or hybrids in the province, while Toyota is already assembling its RAV4 hybrid in Woodstock, Ont. The latest government plan aims for 400,000 EVs or hybrids to have been built in the province by 2030 — a relatively modest target given roughly 1.4 million vehicles were built in Ontario in 2020.
Vic Fedeli, the province’s minister of economic development, job creation and trade, said many decisions are still to come. Ontario, he added, has discussions ongoing with “about a dozen” prospects looking at setting up a battery plant in the province.
“This is a very rapidly moving sector. The door is opening now, immediately, for these decisions to be made,” Fedeli told Automotive News Canada.
Ontario’s latest auto roadmap is the second phase of the government’s Driving Prosperity plan, which was introduced in 2019 and designed to improve competitiveness. Among other supports, the province will extend the Ontario Automotive Modernization Program, or O-AMP, three years past its initial expiry in March 2022 with $12 million in new funding.
Despite the focus on EV assembly, the government has no plans to reinstate consumer EV incentives scrapped in 2018 that offered rebates on EVs of up to $14,000. Instead Fedeli said the province will stick to its supply-side supports.
That focus on assembly and battery production could come to naught, however, if a proposed EV tax credit currently wending its way through Washington clears U.S. Congress.
The incentives would offer American consumers up to $12,500 to buy U.S.-made EVs starting next year. Canadian-assembled cars would be eligible for a portion of the tax credit over an initial five-year period, but would be locked out entirely after 2027, effectively raising their cost in Canada’s biggest export market.
Federal and provincial officials have been pressing their U.S. counterparts over the past several weeks to build a Canadian exemption into the incentive plan, or scrap the credit entirely. Fedeli said he addressed his most recent letter to Sen. Joe Manchin (Democrat-West Virginia), who voiced opposition to the proposed bill last week.
“This EV tax incentive is completely in contradiction to the new NAFTA 2.0, as I call it,” Fedeli said. “This really is a big deal. It rips up a section of NAFTA 2.0 that was fundamental in both sides signing it.”
Ford, likewise, said he was concerned about the tax credit that would “hurt both sides of the border.” He said he discussed the issue with the prime minister this week ahead of Justin Trudeau’s summit with U.S. President Joe Biden and Mexican President Andrés Manuel López Obrador in Washington Thursday.
“I’ll have the prime minister’s back when he goes down there, along with the other premiers,” Ford said. “We’ll do whatever it takes to get excluded from this Buy America.”