Players in Canadian industry still envision a complete domestic electric-vehicle supply chain, from mining to manufacturing, though it’s become more difficult amid the strained trade relationship with the United States and murky policies toward the sector at home.
The Canadian EV industry has been battered this year by the termination of failed battery manufacturer Northvolt’s Quebec manufacturing plant, U.S. President Donald Trump’s imposition of tariffs on Canada’s auto sector and threats to stop imports, and the expiry of federal incentives for EV buyers.
However, it remains clear that the costs of EVs are falling as technology improves, and that their worldwide share of the market will keep expanding, displacing internal combustion engines, said Bentley Allan, vice-president of future economy at the Canadian non-profit Transition Accelerator.
Canada has the critical minerals, precision manufacturing expertise and assembly capacity to be a key player as trade relationships shift, said Mr. Allan, who is also an associate professor of political science at Johns Hopkins University.
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Some countries outside the U.S., such as Indonesia, Egypt and Ethiopia, import Chinese EVs and conduct final assembly domestically because of the economic advantages, such as reducing oil and gasoline imports, rather than climate aims, he said.
This shows opportunity for Canada as Ottawa prepares a climate competitiveness strategy that includes developing the EV battery industry.
“There are also just these underlying thermodynamic advantages to electric vehicles, which are going to continue to drive the market globally,” Mr. Allan said. “So this is going to be a market that we can export into, that we can continue to be competitive in and that we do really have strengths in. Every other country in the world would love to have our critical minerals base, our midstream chemicals expertise.”
Thorny trade disputes dog the industry, however. Canada has maintained a 100-per-cent tariff on Chinese EVs, which sell for prices that would undercut models available domestically. China retaliated by imposing a 100-per-cent tariff on Canadian canola oil and 75.8-per-cent duty on canola seed, making the country’s agricultural sector a victim of the dispute.
Saskatchewan Premier Scott Moe and Manitoba Premier Wab Kinew, whose provinces are major canola producers, have called for Prime Minister Mark Carney to scrap the EV tariff.
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Mr. Allan said canola is a fungible commodity that can be sold to numerous markets, but added that Canada needs a more sophisticated response to the issue and should consider reducing its Chinese EV tariffs.
However, an industry association made up of manufacturers, parts suppliers, miners and others seeking to weave together the EV supply chain said Canada will eventually have to open its market to competition, but should maintain the import duty while the homegrown industry solidifies its footing.
Andrew McKinnon, director of policy at the industry association, known as Accelerate, said the key to a Canadian supply chain is diversifying the customer base, especially as the dominant force in the sector, China, imposes its own export restrictions on materials used to make auto components.
“If we are able to get these projects online and get minerals out of the ground and start to process them, this will make us more essential in the North American sphere. But it also opens up doors to have trading relationships in Europe and elsewhere we maybe weren’t doing before,” he said.
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China last week dramatically expanded export controls on rare-earth minerals. In retaliation, Mr. Trump threatened to impose an additional 100-per-cent tariff on Chinese goods.
“That has a huge impact on not just supply chains that go into automotive, but everything else high-tech,” Mr. McKinnon said. “What we know from the battery materials producers here and innovators – and Canada has a lot of knowledge in this area – is that we can compete operationally.”
Meanwhile, Accelerate released the results of an Environics survey that showed a majority of Canadians see the value in developing an EV supply chain, but most do not see one developing. The survey of 2,039 people across the country, conducted in May, revealed at least two-thirds of respondents support the seven main components of the industry.
This includes 78 per cent in favour of critical-mineral mining, 77 per cent in favour of critical-mineral processing, 75 per cent in favour of EV component manufacturing, 73 per cent in favour of charging equipment and software, 69 per cent in favour of EV production, 70 per cent in favour of battery manufacturing and 66 per cent in favour of battery material production.
However, the results show polarization. Environics noted that, among Conservative voters, for instance, support is highest for critical-mineral mining and lowest for specific EV-linked industries.
Meanwhile, respondents cited the following as the top barriers to building an EV supply chain: uncertainty of the current global economic situation, extensive taxpayer funding required, regulations and bureaucratic red tape, and the length of time it takes from project announcement to startup.