Ford’s plan to build five electric vehicles in Oakville, Ont., by 2028 were welcomed by industry experts, who said it provides stability for Canada’s auto suppliers and could spur further EV production in the future.
“This is the [investment] that says if we’re ever going to emerge as one of the main players or as the leader in EV production, this could very well serve as the catalyst for that,” said Brendan Sweeney, managing director of the Trillium Network for Advanced Manufacturing, which advocates for the growth of Ontario manufacturing.
Unifor on Tuesday announced a tentative three-year contract with Ford Motor Co. that the union said includes a $1.95-billion investment in the company’s Canadian facilities. About $1.8 billion of that would flow to the Oakville assembly plant, which currently builds the Ford Edge and Lincoln Nautilus crossovers, but whose outlook for assembly beyond 2023 was murky.
The contract must still be ratified by Unifor members before it takes effect, and many details are still unknown, including what specific models the plant will build. Unifor President Jerry Dias has said he expects the plant to build about 200,000 EVs by 2028, when all five EV models are scheduled to be built there. He said the first model will begin production in 2025 after a plant retooling in 2024.
The tentative agreement was praised by Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, for providing long-term stability to Ford’s Canadian suppliers. He said the investment shows that Canada can position itself to produce EVs as more of them come online and provides proof that the United States-Mexico-Canada Agreement’s regional content requirements work when it comes to spurring domestic investment.
“It says that the new rules in the USMCA do, in fact, make Canada a more attractive place to make the kinds of cars that companies bank on,” he said.
Under the USMCA, 75 per cent of a vehicle’s content must be sourced from within the member countries in order for it to cross the border tariff-free. As Automotive News Canada previously reported, those regional content requirements were seen by some as a potential barrier to EV production in Canada, since many of the components for EVs and batteries are sourced outside of North America. If it can’t meet those requirements, an automaker might instead choose to build the vehicle in the United States instead of Canada, since it would need to ship fewer vehicles over the border and would avoid tariffs on those that don’t.
But Ford apparently sees an opportunity with the Oakville plant and with regional suppliers. Volpe has said Canada’s suppliers would be ready to support EV production in Oakville, adding that parts makers currently supplying Oakville would have the “first shot” at new volume.
Sweeney said having more Canadian suppliers, as well as suppliers in the midwestern United States, building EV components could have a ripple effect and cause other automakers to begin building their own electric vehicles in Canada.
“If some of this is being produced domestically, that could lead to other companies saying it would be easier to put product X — where X equals an electrified product — here because we can more easily source [parts] from these suppliers locally,” he said.
Building up the province’s supply chain is a goal of the Ontario government, which has promised “massive” financial support for the Oakville investment. At a Monday news conference, Ontario Premier Doug Ford said the lack of an EV parts supply chain remained a hurdle in the province.
“We have the lithium. We have the nickel. We need to manufacture here,” Ford said. “Do you want to be hauling these batteries from a southern U.S. state up to Canada? Or do you want the batteries manufactured down the street that we can ship in hours, saving millions? I want the battery manufacturing done here.”
According to Dias, Ford Motor will assemble batteries for the EVs in Oakville, though components will be sourced from elsewhere.
“We really don’t do much in the way of battery production in Canada,” Sweeney said. “Even if Ford is making proprietary Ford batteries for Ford vehicles, you also start to realize that there’s a battery supply chain. Once that supply chain is in place, it’s easier [for another company] to say, ‘We want batteries over here, too.’”