Is Canada to become a global electric vehicle leader? Investment Monitor & More News Here

When global electric vehicle (EV) gross sales rose by 43% in 2020, Canada noticed a chance to leverage its lithium reserves and pivot its current automotive sector – with consists of operations of main corporations akin to Stellantis, Ford, General Motors, Honda and Toyota – to place itself as an EV chief.

Since then, funding into the nation’s EV and battery manufacturing sectors has come within the billions. Following the April 2022 federal price range announcement, Prime Minister Justin Trudeau highlighted the EV sector and related provide chain as a key focus for the nation’s economic system. Speaking at a press convention in Victoria, Trudeau stated: “We are making smart, targeted investments to [make EVs easier to access].”

More particularly, the Canadian price range noticed $2.9bn (C$3.67bn) earmarked for the constructing of a home essential metals provide chain, one thing extensively thought of to be essential to implementing a profitable and sustainable EV sector.

Liz Lappin, president and director of the Battery Metals Association of Canada, says: “There are no EVs without the raw materials that go in them, and all the refining and manufacturing steps along the way to make specialty chemicals and materials for batteries. Each step needs investment.”

So what has Trudeau’s authorities completed with regards to tapping into its sources, and the way imminent is a strong EV-centric provide chain for Canada? 

Reaching the reserves to push Canada’s EV drive

With an estimated 2.9 million tonnes of lithium (or 4% of global reserves), Canada’s reserves are huge however they’re additionally in distant places and locked within the Canada Shield – a huge area of Pre-Cambrian igneous and metamorphic rock protect.

At a Wilson Centre speak in November 2021, Trudeau highlighted that mining and processing these hard-to-reach sources in an moral and sustainable manner was going to be costly, however he added: “That is the trade-off people are waking up to, particularly post-pandemic, because [these resources] are more than worth it.”

Through the aforementioned $2.9bn slice of the federal price range, the nation seems to be dedicated to mining this notoriously difficult reserve, and figuring out essentially the most environmentally pleasant manner to do that.

Katie Curran, interim CEO at funding promotion company Invest in Canada, believes that this drawback might present a chance for traders. “Most of the critical minerals needed for battery manufacturing are in northern and remote areas of Canada,” she says. “That reality requires continued public and private investment in the physical infrastructure needed to obtain the minerals efficiently and responsibly, and to move them to further stages in the manufacturing process.”

Curran provides that mineral exploration and processing, cathode and anode manufacturing, battery manufacturing, end-use services and products (notably EV meeting) and battery recycling are the 5 key areas of focus for traders.

If Canada is profitable in tapping into its reserves (bolstered by each authorities and personal funding), it begs the query of how far its provide chain might stretch on a global stage.

Tensions between Trudeau and Biden over EVs

With the bordering US aligning with Canada on local weather change quota objectives, the 2 international locations would possibly look like pure companions when it comes to EVs.

In March 2021, Trudeau met with US President Joe Biden to pledge to create a provide chain in North America round EV manufacturing. This alliance was known as into query, nonetheless, when Biden introduced an EV tax credit score that might favour US producers as a part of his Build Back Better Act and $1trn infrastructure invoice.

Trudeau expressed concern over the affect the invoice would have on Canada’s auto business and the roles inside it, and in November 2021 he entered into discussions with Biden to dissuade him from going by with the tax credit score. Speaking to press following the assembly with Biden, Trudeau stated: “The Americans are very aware of Canada’s position on this, our concerns around it and, quite frankly, the threats it poses to more than 50 years of integrated automaking in our two countries.”

Despite Trudeau’s promise to proceed to “find solutions” to this situation, on the time of writing Biden has introduced no plans to scrap the proposed tax credit score. As a end result, Trudeau seems to be doubling down on his plans to bolster Canada’s EV sector.

Billion-dollar investments

In early May 2022, automotive firm Stellantis introduced that it’ll spend $2.8bn to improve the manufacturing of EVs at two of its Canadian factories. This is a part of the corporate’s current $35.5bn fund devoted to its transition from inner combustion engines to EVs.

Approximately one-third of those funds are coming from Trudeau’s authorities and the Ontario authorities as a part of a $410.7m funding to assist Canada’s future manufacturing of EVs.

This funding adopted an announcement in March 2022 that, along with LG Energy Solutions, Stellantis would make investments greater than $5bn in Canada’s first large-scale battery manufacturing plant.

“This investment is a major step in making Canada a global hub for batteries and EV manufacturing, but it is far from the only such investment,” says Curran.

Manufacturing outpaces minerals

With global demand for EVs anticipated to proceed rising, the stability between investments into EV manufacturing and investments into mining the provides wanted to manufacture EVs in Canada is seen by some as skewed.

Curran highlights the necessity for cooperation with the nation’s areas by which the sources sit to deliver a higher stability. “Canada must continue its efforts to work with indigenous peoples, especially in the mining sector,” she says. “Many mineral deposits are located in or near indigenous populations. Early and sustained engagement is critical to respecting Aboriginal and treaty rights, along with acquiring and maintaining community acceptance over the long term.”

Yet gaining goodwill with locals is simply a part of the mining drawback. Calgary-based E3 Metals – which modified its identify to E3 Lithium on 31 May 2022 – projected that greater than 300 million new EVs could be introduced to market globally by 2025 and that this might require a global improve in lithium manufacturing of 500% over the subsequent ten years.

Canada’s wealthy useful resource of lithium might assist the nation realise its ambitions to become a global EV chief, but when the useful resource stays locked within the Canada Shield, progress in the direction of an electric future will undoubtedly stall.

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