As the electric mobility industry quests to establish Canada’s national battery supply chain we look at three companies who are trying to put down factory roots in a critical demonstration of future potential
Reports that Windsor is angling to be the first city in Canada with a large-scale electric vehicle battery manufacturing plant has put heightened focus on the critical importance of battery manufacturing and assembly to Canada’s ambition to be a player in the North America EV economy.
The WindsorEssex Economic Development Corp. (WEEDC), a development corporation, is in the advanced stages of its bid with an undisclosed big-name international battery manufacturer to bring the $2-billion project, and an estimated 2,000 direct jobs, to the Southern Ontario city, says WEEDC executive director and president Stephen MacKenzie.
“Government officials have told us this is the farthest-along proposal about locating a battery manufacturing facility in Canada they’d seen,” Mackenzie told the Windsor Star, last week.
WindsorEssex is facing strong competition from cities in the United States and Mexico, where electricity prices are overall lower than in Ontario — a major sticking point in the region’s bid, Mackenzie said.
However, he adds, the province has been working on ways to reduce electrical and other costs. “That’ll be part of our discussions with the company in a few weeks.”
Batteries key to pushing industry forward
WEEDC declined an interview request from Electric Autonomy Canada. But according to the earlier report, it has been working with all levels of government to craft the Windsor bid over the last few months.
As a traditional automobile manufacturing powerhouse, adjacent to the U.S. border, Windsor is well-positioned to compete for a battery plant that would serve the North American market. Canada is also one of the few countries with the mineral resources required to build EV batteries.
On Friday, Prime Minister Justin Trudeau confirmed the federal government would “absolutely” dedicate significant financial resources to the plant, similar to its recent commitments to General Motors, Ford and Stellantis (formerly Fiat Chrysler) — all three of which have announced EV projects in Ontario since September.
According to WEEDC the company considering the bid has indicated it would like its new plant to be up and running within the next two to three years.
If its bid succeeds, a Windsor battery plant would be a critical component for the future of Canada’s auto industry, says Automotive Parts Manufacturers’ Association president, Flavio Volpe in an interview with Electric Autonomy.
“I would suggest this [battery factory] is the equivalent of landing [a greenfield] automotive assembly plant. In an internal combustion vehicle, the highest value-added part is the engine. And that’s going to change. Whether it’s going to disappear in 15 years the jury is out, but certainly the most important component anyone needs to be in [now] is the battery space. It is a natural next step for a place like Windsor to go from engines and transmissions to batteries and e-gears.”
The economic returns could be huge. Volpe says Canada has the potential to be producing $5 billion in EV-specific components annually by the middle of the next decade, up from $100 million today.
“That includes batteries, and it includes all the tech around the batteries,” Volpe says. “We’ve got to do this right because the other alternative is that the [automakers] decide the most cost-effective way of doing it is to import the cells,” which are the building blocks of batteries.
Why stop at one?
Another important detail in the WEEDC news is that the corporation is also in discussions with two other companies in the battery-related sector. This points up the reality that there are multiple opportunities emerging in the battery space — and again, emphasizes Canada’s strong selling points.
In fact, beyond Windsor, at least two other companies — one in the West, one in the East — are now looking hard at building their own transportation-related battery-making or battery-assembly operations.
In B.C., E-One Moli Energy, a Taiwanese-owned cell maker originally founded in Canada, still has R&D facilities in Maple Ridge, B.C. And right now it is weighing plans for manufacturing expansion there.
Frank So, E-One Moli’s executive vice-president, cites a combination of factors that weigh in Canada’s favour.
“In Canada we have cheaper utility costs compared to other parts of the world,” says So, in an interview with Electric Autonomy Canada. “We are close to the U.S., which is one of the major markets for manufacturing. With the free trade agreements, manufacturing in Canada can certainly be an advantage in terms of customs and duty charges versus importing goods from overseas. And the dollar is still quite weak, which is a good thing in terms of having manufacturing in Canada.”
The plant E-One Moli is considering for Canada would be capable of producing 90 to 100 million battery cells per year (for scale an electric vehicle contains roughly 4,500 cells), or one and a half gigawatt hours of power. That would make it the largest cell manufacturing plant in Canada.
So says the build-out plans were derailed by COVID-19 and due to that E-One Moli’s proposal for critical federal government funding has yet to be approved — leaving the company unsure of what the future holds for a Canadian expansion.
“We have been told our project is very strong and it’s certainly in the mind of a number of [Canadian] ministries and cabinets, but that’s as much as they would say,” says So. “There has been enough push from the Taiwanese government that we are looking at putting up that next factory in Taiwan instead. It is possible that we are losing our window of opportunity to someone else.”
Across the country in Quebec, Lion Electric Co., one of Canada’s leading electric bus manufacturers, is still in negotiations to set up its own $200-million battery assembly facility at an as-yet undisclosed location. The factory would allow Lion to more easily integrate battery packs — largely ordered from third-party suppliers — into its vehicles as well as help the company consolidate its vertical integration.
Originally, an increase in financing from the United States was pushing Lion toward the factory being situated south of the border, where it is also planning to build a new vehicle assembly plant. However, when Electric Autonomy spoke exclusively with Lion CEO, Marc Bédard, in December, he said the company’s recent SPAC merger had made him “optimistic” the battery factory could end up in Canada. Lion’s final plans about the factory are set to be announced later in 2021.
The province of Quebec has also made clear its ambitions to set up its own battery supply chain with up to $1.4 billion in investment capital on the table. With much of the infrastructure around batteries already in place — mining, manufacturing, recycling and cheap, renewable electricity — in addition to the provincial purchase rebates and public education Quebec is advantageously positioned to consolidate a battery supply chain.
The time is now
What these developments point to is that Canada’s potential “hockey stick” moment in the electric mobility supply chain is coming to a head. Industry stakeholders and experts say the federal government is on the right track with its battery supply-chain strategy, and urge further investments to ensure success.
Landing all three manufacturing projects – Windsor, E-One Moli and Lion – would be huge in its own right. But it would also speak volumes about the country’s ability to support all components of a battery supply chain — from a facility to process the raw materials to one that creates the cells to another that integrates them into the vehicles.
“It’s absolutely critical for the Canadian industry to get a series of battery plants as part of this gross up on EVs,” says Volpe.
“Nobody [in Canada] is making 250,000 batteries a year. So, that’s what the next three to four years is going to be about: how do you help the battery companies and the mines and the processors prove scale? Or we are going to miss this opportunity.”