Canadian electric vehicle makers brace for growth on both sides of the border

TORONTO – Damon Motors Inc. likes to call its electric motorcycles revolutionary, but the company’s manufacturing plans also run counter to a trend among Canadian companies.

TORONTO – Damon Motors Inc. likes to call its electric motorcycles revolutionary, but the company’s manufacturing plans also run counter to a trend among Canadian companies.

It is one of the many electric vehicle companies that have emerged in Canada as the push towards emission-free driving accelerates, but unlike most others, it plans to export the majority of the vehicles it does. will begin producing in Surrey, BC next year to markets. in the United States and Europe.

Company founder and CEO Jay Giraud said the absence of tariffs on exports to the two regions was a key factor for building in Canada, as was the ability to build nearby. of their research and development team.

“As a young company, it is very important that our R&D and manufacturing are co-located. “

Other Canadian electric vehicle companies have also built manufacturing plants near their homes, but increasingly seek to expand production in the United States, as protectionist policies and other pressures increase the tendency to build where we sell.

“There really is a relationship between where you build and where you sell and this is especially the case with electric vehicles,” said Joanna Kyriazis, Senior Policy Advisor at Clean Energy Canada.

“Electric vehicle batteries are very large. They are heavy, expensive and logistically difficult to transport long distances. So as the global auto industry shifts to electric vehicles, we are seeing more regionalization or localization of supply chains. “

To improve domestic production, experts like Kyriazis are pushing for more purchasing incentives, both on the side of personal and commercial vehicles, as well as other government support programs.

Montreal-based manufacturer Lion Electric Co. currently produces school buses and commercial electric vehicles at its plant in Saint-Jérôme, Que., Which last quarter amounted to 40 vehicles, including 28 for Canadian demand and 12 for the states. -United

But in the future, the company has big plans to increase production in the United States with a plant in Illinois that it plans to open next year with a capacity of 20,000 vehicles per year.

Company spokesman Patrick Gervais said Buy America’s transit vehicle arrangements were certainly a motivator to build the plant in the United States, but they also fit in. in the company’s efforts to make manufacturing more energy efficient.

“We have a policy to build where we sell, because we believe that this fits with our mission which only concerns GHG emissions. “

The company’s Canadian plant also has significant excess capacity as it is capable of producing approximately 2,500 vehicles per year, so additional government support would also mean increased production in the country.

“Electrification is a great new opportunity for the Canadian economy, and we need to make sure we put everything in place to grow this entire ecosystem,” said Gervais.

Winnipeg-based bus maker New Flyer Industries produces some of its production in its hometown, but it also has three factories in the United States. around 1,700 of these buses compared to a capacity of around 8,000 per year on its three production lines.

Vicinity Motor Corp., based in Aldergrove, B.C., has a production facility in the community, but is also building a facility in Washington state that it says will be Buy America compliant.

Some major OEMs have also come to look further to build their electric vehicle components. Aurora, Ont. Parts giant Magna International Inc. last month announced an agreement to build battery boxes for the high-profile Ford F-150 electric in the United States, and said in February that it had started building a new factory in Michigan that will produce battery boxes for the electric GMC Hummer, but the company says it does not produce any electric vehicle parts in Canada.

There are certainly changes ahead for the Canadian electric vehicle industry with significant spending commitments from the Big Three US automakers, but it will be a few more years before a pure electric passenger vehicle leaves a market. Mountain range.

Electric passenger vehicle manufacturing in Canada is also threatened by US President Joe Biden’s tax credit proposal, which would favor vehicles made in the United States and which, according to the Canadian government, would effectively impose a 34% tariff on electric vehicles assembled in Canada.

In a letter sent to key members of the US Senate on Friday, Deputy Prime Minister Chrystia Freeland and Commerce Secretary Mary Ng threatened to impose retaliatory tariffs if the proposed incentives were implemented.

As this is a pivotal moment in the transformation of the manufacturing sector, Canada must do more now to ensure that the entire supply chain and economy can benefit, a said Matthew Fortier, CEO of Accelerate, a new industry alliance.

The alliance, launched in September, was formed to push for a more cohesive national strategy, to attract investment through applications for electric vehicles, including minerals, parts, batteries and assembly. .

“This is a generational opportunity to build a strategy where Canada can be competitive,” said Fortier.

He said it was important to act quickly as the country has already lost time, especially as competition from other governments intensifies to secure crucial battery production that can help anchor other parties. of the supply chain.

“Is Canada late? Absoutely. We would have liked to have had a strategy last year, five years ago, but we absolutely can be part of the global race for competitiveness in the field of electric vehicles.

There are signs of progress, including new tax breaks expected to take effect in the new year, billions of dollars earmarked for the electrification of transit, and the federal government says warrants are coming to the government. minimum number of electric vehicles that dealers must sell.

Government funding has also been provided to ensure greater production from a wide range of projects, including $ 590 million for Ford Motor Co. to switch to electric production in Oakville, $ 100 million to help Lion Electric to build a battery assembly plant and research center, and $ 400,000 from the Government of British Columbia to help Damon Motors transition to production of its pioneering motorcycle design.

However, further coordination and effort is needed if Canada is to seize the full potential of a time of so much competition, Fortier said.

“The window is open right now, I don’t know when it’s going to close, I just know there are a lot of different counties and jurisdictions trying to go through that window.”

This report by The Canadian Press was first published on December 12, 2021.

Ian Bickis, The Canadian Press

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