In shadow of U.S. protectionism, Canada in heated battle for EV battery manufacturing

- Advertisement -

- Advertisement -

Ford Motor Company has committed to the biggest investment Canada has yet seen in EV assembly, but has yet to decide whether to make batteries here.Rebecca Cook / Reuters

Canada is rushing to close deals for new plants to produce electric-vehicle batteries amid increasingly heated North America-wide competition for investment in EV manufacturing.


Government talks with at least three companies looking to make major battery-manufacturing investments have reached a critical stage, sources familiar with the talks confirmed on Wednesday.

According to sources, the most advanced includes the construction of a manufacturing facility in Ontario by South Korea’s LG Energy, which is not being identified due to the sensitivity of the talks. Construction of the LG facility will be partly funded by federal and provincial governments, and sources said its primary customer will be Stelantis NV, a company created earlier this year by the merger of Fiat Chrysler and France’s PSA Group.

- Advertisement -

Stelantis NV is also directly involved in talks with Canadian governments around another battery plant, which it intends to build as part of a partnership with French company TotalEnergies.

The third set of talks involves Ford Motor Co., which has committed the biggest investment Canada has ever seen in EV assembly, but has yet to decide whether to make batteries here, the sources said.

The pressure on federal and provincial governments to get such investments off the ground is enormous, as negotiations for Canada’s auto sector under the shadow of American protectionism are taking place at a particularly critical and frightening moment, threatening the future of the industry. danger to.

As auto makers shift from gasoline-powered cars and light-duty trucks to electric vehicles, Ottawa promises to capitalize on Canada’s combination of natural resources and manufacturing infrastructure and expertise to become a major EV player. But its efforts are being challenged by US President Joe Biden’s plan to introduce an EV purchase rebate of up to $12,500, with a large portion of that team on vehicles being built in the United States.

Billionaire Tech Brothers anoints another company for success, this time electric-car maker Rivian

Ottawa begins implementing its new climate agenda – too many details to come

The rebate plan, which Ottawa is lobbying Washington to change in recognition of the auto sector’s first continental integration, is making it more difficult for Canada to compete for new EV investments. This has given Canadian efforts additional urgency to win those deals and lock in Canada’s role in the supply chain.

Battery manufacturing is an area of ​​special focus. Anticipating a surge in North American demand for EVs due to government incentives and regulations aimed at reducing greenhouse gas emissions, auto makers are deciding where to make batteries. Those plants will serve as anchors for supply-chain components, and will influence future decisions about where EVs are made.

“Any major assembler in North America is probably looking at two battery plants at most,” said Flavio Volpe, president of the Automotive Parts Manufacturers Association of Canada. “And once they decide where the first and second go, the next investment window probably won’t open for another 10 years.”

So far, Canada has been disappointed in its efforts to win those investments. Most recently this included the US$1.3 billion Toyota Battery Plant that went to North Carolina.

Ottawa is nonetheless projecting optimism about the ongoing negotiations. Federal Innovation, Science and Industry Minister François-Philippe Champagne – who has spent much of his time jetting around the US and Europe to pitch auto executives – recently told digital media outlet The Logic that “we are close to the ground”. And coming closer. Some very important investments.”

In addition to its importance to the domestic auto industry, and the thousands of jobs at stake, the discovery of such deals is also an early test of the federal government’s recent commitment to spend large sums of money to attract a climate-friendly industry.

Over the past year, Ottawa has launched an $8 billion “Net Zero Accelerator” aimed at helping industries decarbonize and attract new clean-technology manufacturing. Building out the EV supply chain is one of that fund’s clear objectives, and Mr. Champagne is offering money from it to partially subsidize battery plants.

Provincial governments are being tested for their willingness to put their money on the table and work with Ottawa to make the case to manufacturers. They are also competing against each other to some extent. Ontario has traditionally been dominated by Canadian auto-making, and is the most likely destination in the country for investments such as LG; Quebec has a growing EV industry and a very strong EV consumer market, and is also trying to secure massive battery investment.

One reason that all concerned may be able to shun US protectionism is that batteries make up a relatively small portion of the rebates made in the US. Under Mr. Biden’s plan, EV purchases would receive $7,500 as a rebate, regardless of where the cars were made, and another $4,500 if they were assembled in United States factories. Only $500 more for battery packs with at least 50 percent of their components made in the US

But the plan calls for only US-built vehicles to be eligible for a $7,500 basis starting in 2027, so Canadian officials have stepped up their efforts to get manufacturers to make longer-term commitments on this side of the border. The work has been cut.

Even as EV assembly commitments Canada has already secured “could be at risk” if a US subsidy plan sends cold through the industry, Dunsky Energy adviser Mo Kabbra suggested. Monitor Industry Closely – Making batteries underscoring the challenge and imperative to attract.

“A lot of these investments are dependent on having a really integrated North American supply chain,” he said.

Your time is valuable. Get the Top Business Headlines newsletter delivered to your inbox with ease in the morning or evening. ,


- Advertisement -
Mail Us For  DMCA / Credit  Notice

Recent Articles

Stay on top - Get the daily news in your inbox

Related Stories