Canada Needs Strong ZEV Policy

Unless the federal government bolsters their policy support for zero-emission vehicle manufacturing, Canada will fall short of its vehicle electrification targets, put only three million ZEVs on the road rather than 15.6 million, and gain only a fraction of the C$150 billion in economic activity and 1.1 million jobs that could be on offer by 2040, according to two analyses released earlier this month.

Modelling by Vancouver-based Navius Research painted “a bright—and compelling—portrait of the future of Canada’s ZEV economy” over the next two decades, indicating that “the transition towards zero-emission vehicles will play a crucial role in Canada reaching its climate change targets and could bring sizeable economic opportunity to the country,” Electric Autonomy reports. “That transition won’t be as strong, however, without a national zero-emission vehicle production mandate put into place, despite the potential effects of several other EV-supportive policies already at work.”

In a concurrent release, the International Council on Clean Transportation (ICCT) and the Pembina Institute concluded that Canada’s automotive sector will “dwindle away” if the country doesn’t rapidly accelerate electric vehicle production, the publication adds. “Canada is a huge auto producer,” said ICCT Senior Researcher and Canada regional lead Ben Sharpe. “But nobody is really shining a light on the fact that if Canada’s doesn’t quickly ramp up its EV production, the steady decline we’ve seen in auto manufacturing over the past 20 years is going to accelerate.”

The Navius study forecast the economic impact of ZEV adoption under a series of different policy scenarios. In the first, with federal and provincial governments maintaining their current policy support, “ZEV sales will continue to grow mainly due to shrinking vehicle costs and consumer preference changes as a result of expansion of EV infrastructure,” Electric Autonomy says. “However, the totals would fall dramatically short of Canada’s current targets for vehicle electrification— 30% of vehicles by 2030 and 100% in 2040.”

Even then, the ZEV industry would surge from $1.1 billion today to $43 billion in 2040—an average annual growth of 18%, about 16 points ahead of the general (pre-COVID) economy—deliver three million new ZEVs, and increase its employment numbers from 11,000 to 342,000. But with what Electric Autonomy calls “effective policy”, Ottawa would hit its electrification targets, add another 12.6 million ZEVs to the fleet, pour $100 billion and 758,000 jobs into the economy, and drive down EV production costs.

“While battery and fuel cell costs are expected to decrease by more than half over the next two decades, for instance, mandating a certain level of ZEV production could lead to further production chain efficiencies and even lower product costs,” the news story explains. “The higher the level of ZEV production internationally, the more that effect is expected to be increased.”

But the ICCT-Pembina study showed the country lagging far behind that potential.

“While Canada currently produces about two million vehicles annually, ranking 12th in the world, electric vehicle production makes up just 0.4% of that total—80% lower than the current global average share of EV production among auto producing nations, which is 2.3%,” Electric Autonomy says. “With worldwide EV sales growing more than 60% a year between 2012 and 2018, that trend is sure to continue, Sharpe says. Yet none of the US$300 billion in EV manufacturing investments announced by global manufacturers for North America between 2020 and 2025 is explicitly slated for Canada.”

“Electric vehicles are coming, it’s a global phenomenon,” Sharpe warned. “Canada has to jump on this, or the auto sector is going to dwindle away, likely faster than the decline we’ve seen over the last couple of decades.”

“Other countries are moving forward in earnest,” so “there needs to be a very focused effort to drive our ZEV economy,” added Pembina Ontario Regional Director Carolyn Kim. “It requires demand-side policies that help consumers find and adopt zero-emission vehicles. But also, supply-side policies that help bring closer to home the manufacturing and production of those vehicles—whether it’s assembly, or parts and components.”