Canada Must Now Build on EV Investments

Matthew Fortier, CEO of the Accelerate Alliance

Bentley Allan, Research Director, Transition Accelerator 

March 27, 2023, Toronto Star.

The past two years will be remembered as the moment when the global electric vehicle market achieved
hockey-stick growth, with year-over-year sales tripling from 2020 to 2022. Capital investment in the global EV
supply chain has similarly surged as governments around the world offer a range of incentives in the scramble to
secure vehicle production mandates, new battery plants, and critical minerals.

Canadian governments, to their credit, have not been left on the sidelines in this global race. In the past year,
Ottawa and Ontario, have deployed incentives to attract multi-billion-dollar investments from Stellantis/LGES,
Honda, Ford, General Motors, Volkswagen, Mercedes, and Umicore. Governments across Canada, meanwhile, are
building out charging infrastructure and supporting EV-focused innovation in both university labs and
accelerators.

The Volkswagen announcement this month is a testament to that work. And to do it in the face of the U.S.
Inflation Reduction Act, which would provide a battery factory approximately $2bn per year of support, is all
the more impressive and demonstrates a commitment to securing Canada’s place in global automotive value
chains.

Yet Canada can’t just now sit back and assume its place in the global EV industry is secure. Just the opposite.
In order to justify a public outlay on subsidies to offset IRA incentives, Canada now must strategically build
value chains from mining to cathode active battery materials and transition parts manufacturers to ensure they
are making the equipment needed for next generation vehicles. The planning required to achieve these ends begins
with a clear vision of what Canada brings to the table: transparent government, abundant clean electricity, a
skilled and educated labour force, extensive mineral resources, and expertise in mining finance.

But we also need to define what success looks like for the future Canadian EV sector. This includes an assessment
of the investments needed to incentivize global mining companies to commit to Canada; a plan to ensure that this
emerging industry creates clear pathways for Indigenous participation; and incentives to foster R&D into
next generation batteries and manufacturing. All of this must be coordinated in a transparent manner so that
stakeholders can align their work with public production targets and investment timelines.

Perhaps most importantly, we need to pay close attention to international best practices for developing cohesive
and effective industrial strategies. Transparent communications — between governments, stakeholders, and
industry — is paramount. Canadian policymakers can look for inspiration to independent public-private
partnership models, such as the EU’s InnoEnergy, which fosters the development of European battery and hydrogen
value chains.

For Canada, an independent public-private model would mean systematic coordination between the private sector,
governments and civil society to define ambitious but achievable targets and specific, time-bound actions for
achieving those targets. It would also mean identifying challenges holding back investment into the Canadian
minerals and battery materials ecosystem and prioritizing solutions; and it would mean developing institutional
relationships with counterparts in allied jurisdictions such as InnoEnergy, the European Battery Alliance,
Li-Bridge in the U.S. and the Korean Battery Alliance.

This is how Canada can achieve a broad consensus on strategy — an answer, in short, to the question of what we’re
going to be good at – and enable the public sector to design policy and align resources to deliver on the goals
we’ve collectively identified.

Driven by technology and a global imperative to dramatically reduce emissions, the world of mobility is
reinventing itself. After almost 60 years of cross-border free trade that transformed Canada into the world’s
eleventh largest vehicle manufacturer, we know how the development of an integrated and globally competitive
industrial ecosystem becomes a sort of magnet, capable of attracting investment, talent, and innovation, and
ultimately building an inclusive form of prosperity.

Repeating this formidable achievement is a national project for Canada’s 21st century.

Matthew Fortier is President and CEO of Accelerate, Canada’s ZEV Supply Chain Alliance.

Bentley Allan is Research Director for Net-Zero Industrial Strategy at the Transition
Accelerator