Regardless of who wins tomorrow’s U.S. presidential election, Canada will have its hands full with electric vehicle manufacturing and the reduction of greenhouse-gas emissions.
It’s no secret that President Donald Trump and Democratic Party nominee Joe Biden offer starkly different visions of the United States and that the results of the election will have ramifications that extend beyond U.S. borders.
This is especially true when the issues are relevant to the auto industry. Namely, EVs and climate change.
Biden’s platform calls on the United States to develop new fuel-economy standards more stringent than what the Obama administration enacted, as well as “dedicated grants and funding” to help companies retool their factories and build new ones for EV production.
The Trump administration, meanwhile, has moved to roll back Obama-era emission rules and has sought an end to federal
EV subsidies, among other moves.
This, of course, only scratches the surface of the major differences between the two candidates. And those topics are unlikely to be front and centre for many U.S. voters who might be more concerned about the COVID-19 pandemic, economic uncertainty, police brutality, social unrest, the Supreme Court, health care or the other issues that have dominated the news cycle.
But come 2021, the United States will move in one of two opposite directions on EVs and emissions. And either way, Canada will have major decisions to make.
In the event of a Biden victory, the U.S. federal government could become more active in attracting EV investments into the country. That would cut into an advantage the Canadian federal government has long had over its counterpart to the south.
While many states have been extremely aggressive in offering incentives for automakers to build new factories or retool existing ones, the U.S. government historically has not been involved. In Canada, however, Ottawa frequently doles out financial support for automakers’ investments. And the industry has generally seen that as a factor working in the country’s favour.
The federal government could respond by offering more and larger incentives, of course, but that poses a political risk. Many voters see such incentives as nothing more than corporate welfare for companies that make plenty of money on their own. But doing nothing could mean risking the loss of much-needed investments for manufacturing in Canada to the United States.
If Trump wins? Perhaps most crucially for the Canadian government, it could finally decide to break away from the United States on emissions standards and set its own. Canada has typically followed the United States in that regard, but the Trump administration in March finalized a rollback of U.S. emissions standards that are well below the targets set under the Obama administration.
Perhaps Canada would follow the lead of California, which in August finalized agreements with major automakers — including Ford, Volkswagen and Honda — to cut back on emissions more aggressively. California also wants to ban the sale of new internal-combustion vehicles by 2035.
Given the Canadian government’s climate goals to reduce greenhouse-gas emissions to 30 per cent below 2005 levels by 2030, and to net-zero by 2050, such a move would not be a big surprise.
But it would rankle an industry that has long called for harmonized standards between the two countries as well as spur intense debate over the impact on new-vehicle sales and the country’s ability to attract auto investments.
So, no matter who wins the U.S. presidential race, the next four years are sure to be of major consequence for Canada’s auto sector.