A battery-heavy strategy is helping Canada stay relevant

When the federal and Ontario governments began hinting last fall at imminent investments in Canada’s electric-vehicle battery supply chain, I was more than a bit skeptical.

Canada’s potential for hosting its own battery ecosystem played well in ministerial speeches. But after two decades of slow decline in the country’s auto-manufacturing sector, it wasn’t the first set of talking points that governments dreamed up to try to reignite the industry.

Now, however — as pledges, promises and billions of dollars in battery supplier and automaker spending testify — Canada is pitching corporate actors a compelling sell sheet, blending the promise of U.S. market access with raw-material supply, a strong environmental record and government support.

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As the auto sector enters uncharted territory, government has been “trying to find something to hang their hat on,” said Sam Fiorani vice-president of global vehicle forecasting at U.S.-based AutoForecast Solutions (AFS). So far, he said, the battery-heavy strategy is helping Canada “stay relevant.”

On Aug. 23, Volkswagen Group and Mercedes-Benz Group signed memorandums of understanding with the Government Canada as a way to secure access to much-needed minerals such as nickel, cobalt and lithium for battery production.

But even more concretely, $1.5-billion commitment in July from Belgium’s Umicore to build an EV battery materials plant near Kingston, Ont., is an example of how Canadian economic development teams have flipped the script on two decades of automotive attrition.

Government narratives about the strength of combining Canada’s raw materials with its advanced-manufacturing base are resonating with industry because an integrated North American supply chain is what the automotive industry needs, said Conrad Layson, senior alternative-propulsion analyst at AFS.

“That’s what I think Canada really brings to the table,” he said. “It’s the ability to bring [raw materials] out of the dirt and into your car.”

The forecasting firm expects more of the supply chain to fall into place as electrification advances.

Fiorani pointed to Honda’s and Toyota’s assembly operations in Ontario — where current production covers gasoline and hybrid vehicles, but not battery-electrics — as having potential. General Motors’ Oshawa Assembly Plant, which builds gasoline and diesel pickups, is another example.

“When these plants convert over to EVs,” Fiorani said, the engine plants that support them will be repurposed for battery production or their workforces shifted to other regional battery sites. GM’s St. Catharines Propulsion Plant, which builds V-6 and V-8 engines, is one example of a site that could someday build batteries, he said.

“All these plants are going to have to have something to build in the future.”

As if Canada’s burgeoning EV battery supply chain needed another shot in the arm, a dramatic, proposed shift in U.S. auto policy could lend further assistance.

Eight months after U.S. Sen. Joe Manchin cut the legs out from under President Joe Biden’s proposed electric-vehicle tax credit, the West Virginian and his Democratic colleague from New York state, Sen. Chuck Schumer, released a rewritten version of the legislation on July 27. If passed, it would offer U.S. consumers incentives of up to US $7,500 for EVs.

The previous iteration provided rebates for U.S.-built vehicles, which could have ended the Canadian EV industry before it even got off the ground. But the latest legislation takes a North America approach, giving Canadian minerals and battery components favoured status.

With the spectre of U.S. protectionism receding and Canada’s battery supply chain on a roll, for the first time in a long time, the future of Canadian automotive looks assured.