In the face of a trade war with the U.S., Canada’s EV and battery industries issue a call to action

Canada’s automotive sector has entered a time of unprecedented volatility and the end is not in sight.

President Donald Trump’s threat to impose 25 per cent tariffs on all imports from Canada and Mexico, including those from the automotive industry (except critical minerals, which may be subjected to a 10 per cent tariff) dominated discussions at Electric Autonomy’s third annual EV Innovation & Technology Conference.

The event, held at York University in Toronto before an audience of over 200 attendees, took place days after the U.S., Canada and Mexico reached a 30-day truce in the impending trade war.

As the industry confronts the possibility of onerous tariffs, speakers dug deep in search of opportunities.

Distilling the panels and presentations throws three key takeaways into sharp relief:

• Canada must bolster its ability to compete through greater investment in the supply chain;
• Suppliers and automakers need to diversify their customer base to ensure their businesses are sustainable; and
• Governments and private capital should ramp up investment in R&D while upskilling the work force to handle more sophisticated technology on the factory floor.  

“I am convinced,” said panelist Caroline Olsen, research and development director for SGS Canada, “that in 10 years, Canada will have created inter-provincial hubs where we will collaborate on innovations and will connect all the elements in the supply chain.”

What follows is a summary of the perspectives and predictions from each facet of Canada’s EV and battery supply chain.

Investing in self-sufficiency

Matthew Fortier, CEO of Accelerate ZEV, says success in the auto industry hinges on prioritizing investments in the supply chain. Fortier emphasized it is essential to de-risk supply from China, currently the primary source of critical minerals and materials used in local battery manufacturing.

“Get competitive,” advised Jeff Gaulin, general manager of Corporate Affairs for Vale Base Metals. “Invest capital to establish first mover advantage. World demand for minerals isn’t going away.”

Speakers also noted that, while Canada is rich in resources and mining know-how, processing and refining plants are relatively scarce.

This is a vulnerability in the supply chain that should be addressed sooner than later.

Big legacy players are starting to act on the imperative — which has lately acquired a new level of urgency — to reconfigure the value chain to favour domestic supply while also maximizing production capacity.

“Legacy automakers will have at least 20 per cent battery-electric vehicle penetration by 2030,” predicted Joe McCabe, president and CEO of AutoForecast Solutions.

“They need to both invest for the future and build up capacity. None are running at full capacity right now. It’s closer to around 70 per cent capacity. So big players are collaborating and discussing co-investments in the supply chain like critical minerals.”

Broadening the consumer base

In 2023, Canada exported $51 billion worth of vehicles to the United States, which accounted for 93 per cent of the country’s total vehicle exports.

But now, with a trade war brewing, over-reliance on the U.S. market is viewed as a weakness for Canada. However, diversifying the auto industry’s customer base may take time.

Several speakers at the conference believe there is more room in Canada’s domestic market for EV sales, provided automakers produce vehicles that match consumer preferences and needs.

“There is a new type of customer now. Decisions are more emotionally based; this consumer is more socially conscious of consumer choices,” said McCabe.

“Electrification is here to stay. It’s too big to fail. But the early adopter market is fading and mass market movers are the next consumers to focus on. And they are looking at cost and range.”

Fortier added that procurement policies should promote Canadian content, which alone could prod adoption levels upwards.

Innovate – if you can

Panelists noted that the pace of technological advancement is picking up and that China is accelerating efforts to incorporate sophisticated digital and robotic capabilities into auto manufacturing.

Maciej Hryniewicki, Canada data & AI lead for utilities with Accenture Canada, told the audience that “humanoid robotics are already here and revolutionizing the workplace in the automotive sector. They can work on systems that were originally built for humans and can be trained via ‘digital twin’ [a virtual replica of an object], and perform the same task on a physical entity.”

Meanwhile battery technologies, explained Linda Nazar, chemical engineer and senior Canada research chair in solid state energy materials at the University of Waterloo, are evolving from lithium-ion to solid state and even sodium-ion batteries.

Nor has charging infrastructure been spared.

With the emergence of bi-directional charging and smart charging, Canada must keep up with the advances, says Dan Blondal, CEO of Nano One Materials.

But not all companies have the resources to invest at the scale required nor have the capacity for risk associated with piloting the latest piece of technology.

Désirée Tremblay, manager of innovation and finance strategy, with Dana Canada, pointed out that “collaboration is more important than ever. We need a strong plan and supportive policies to catalyze innovation. But we are also held back by a shallow labour pool in terms of skillsets.”

Still, as several speakers reminded attendees, Canada has some very important bargaining chips: an abundance of clean energy; a wealth of critical minerals; extensive industry infrastructure that supports mining and auto production; a work force that has deep roots in the auto industry.

“We should think and do big,” said Ali Emadi, professor at McMaster University’s Automotive Research Centre. “We need to make big punches.”