New developments suggest Canada is about to play a greater role in Tesla’s global supply chain
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Apr 14, 2022
Emma Jarratt

A new plan to hire a critical minerals supply chain policy associate in Toronto, plus a rumoured deal with Vale to secure Canadian nickel and Tesla’s growing commercial and lobbying presence, all suggest Canada is about to play a greater role in the automaker’s global supply chain

In addition to influencing policy in Canada, Tesla — as well as several of its major suppliers — is looking north for supply chain opportunities including mining raw materials and manufacturing batteries.

A new plan to hire a critical minerals supply chain policy associate in Toronto, plus a rumoured deal with Vale to secure Canadian nickel and Tesla’s growing commercial and lobbying presence, all suggest Canada is about to play a greater role in the automaker’s global supply chain

Tesla is rounding out a busy few months in Canada with a new job posting for a senior policy associate in critical minerals and supply chain based in Toronto.

The successful applicant, reads the company’s listing, will “work on a variety of matters related to light- and heavy-duty vehicle regulation in addition to a particular focus on global battery minerals and responsible sourcing policy.” The scope of the role is “Canada, U.S. and globally.”

The prominent Canadian position is the latest signal that the Texas-based automaker is solidifying its position in the country and hoping to make some significant strategic impacts.

In addition to influencing policy in Canada, Tesla — as well as several of its major suppliers — is looking north for supply chain opportunities including mining raw materials and manufacturing batteries.

This step of adding a third Canadian role to their North American Policy Team builds on Tesla’s signals, hints at a big move in critical minerals in Canada and is the clearest signal yet to watch this space.

Sourcing raw materials in Canada

Tesla is lobbying the British Columbia, Ontario, Quebec, Nova Scotia and federal governments about various EV-related issues — an ongoing activity for the last two years. However, in the last year, its focus has become increasingly honed in on charging infrastructure with particular interest in advocating changes to current policies and securing investments to advance heavy-duty truck adoption.

Now, in seeking to add a new Canadian policy advisor focused on responsible sourcing of critical battery materials and sustainable energy, Tesla appears to be mounting another new offensive. This aligns with several recent rumours and reports and, perhaps, is a sign that Tesla is seeking the strategic benefit of expanding its Canadian footprint to offer more protection from global events.

With COVID-19, a global chip shortage and Russia’s invasion of Ukraine disrupting the supply chain, the auto sector has suffered some serious setbacks. On several occasions Musk has asserted that Tesla’s strategic supply chain practices and technology are keeping the company secure. But with so much Tesla-related activity happening overseas and global events wreaking havoc from Shanghai to Berlin, its possible Tesla is viewing Canada as a way to bring some interests back closer to home.

In early March, days after the invasion of Ukraine, nickel prices jumped 250 per cent in 48 hours. By the end of the month, Bloomberg reported that Tesla had signed a secret deal with Vale to secure a source of nickel from Canada. The automaker never confirmed the details, nor did Vale comment on the matter, but Bloomberg claimed it was the widespread sanctions on Russian exports — including key supplies of nickel — that motivated the deal.

In addition to having large natural stores of nickel, Canada has an environmental and sustainable governance advantage over many other mining markets — something Tesla and Musk have been vocal about as a condition of their contracts.

“Please mine more nickel,” Musk said to producers on a corporate earnings call in July 2020. “Tesla will give you a giant contract for a long period of time if you mine nickel efficiently and in an environmentally sensitive way.”

Tesla’s presence to date

Taking stock of Tesla’s supply chain presence in Canada to date, the story follows two threads: 1) its direct involvement in battery technology and battery making, and 2) involvement in the broader supply chain by Tesla-affiliated partners.

In 2019, Electric Autonomy Canada exclusively reported that Tesla acquired Richmond Hill, Ont.-headquartered battery equipment manufacturing company, Hibar Systems. In December 2020, Tesla renamed Hibar to Tesla Toronto Automation ULC.

The acquisition was lauded as a major strategic victory for the automaker. Hibar was considered the leading battery equipment maker in the world and Musk later said that Hibar’s technology would play an essential role in Tesla’s network of gigafactories.

Then, in January 2021, Tesla renewed and expanded its long-standing research and development relationship with the world-renowned Jeff Dahn lithium-ion battery research lab at Dalhousie University in Halifax for a second five-year term. Dahn is a preeminent scientist and physicist in the field of lithium-ion batteries and has held the NSERC/Tesla Canada Industrial Research Chair since 2016.

Then, in May 2021, patent registry documents showed Tesla purchased three battery patents from Mississauga-based, battery cathode technology company Springpower International for $3. A senior Springpower scientist’s social media profile describes one of the company’s goals as follows: “Develop silicon based anodes for Li-ion battery, controlling a catalyst-free chemical etching process for mass production of one-dimensional nanostructured silicon.”

Public records show Tesla acquired Springpower outright — a transaction that likely happened in late 2020. But Tesla has never commented on the Springpower matter and it is unclear how the former company’s work will or has already fit into Tesla’s strategic plan.

Finally, last November, Tesla opened its first branded Ontario factory in Markham where it is making the battery equipment based on Hibar technology that will end up in Giga Texas and Giga Berlin.

Affiliated partners stepping up

While much of that activity was taking place, Canada has also been rapidly securing key investments in the EV battery supply chain that have lifted the country’s stature in the EV battery manufacturing world and caught the attention of Tesla-affiliated market giants.

The news came fast and furious: In September 2021, Canada had no battery cell or anode/cathode manufacturing facilities. As of this month, Quebec boasts commitments for two battery cell factories, courtesy of Ontario-based StromVolt and U.K.-based Britishvolt; an existing Lion Electric battery pack factory; and two planned cathode active material plants, from Germany’s BASF and global automaker General Motors in a joint-venture with Korea’s Posco Chemicals. Meanwhile Ontario has secured the Stellantis-LG Energy Solution $5-billion battery cell facility in Windsor.

And behind the scenes of the headlines, Canadian officials have been meeting with other major battery supply chain players, including some with prominent ties to the Texas EV maker.

Minister François-Philippe Champagne with representatives from Panasonic Corp. Photo: Twitter/@FP_Champagne

“Talent. Clean energy. Critical minerals. Ambition. Canada has many strategic advantages when it comes to the battery ecosystem. That’s the message I shared with @panasonic this morning,” tweeted François-Philippe Champagne, minister of innovation, science and industry of Canada, after meeting with visiting deputies of Panasonic Corp. in Ottawa earlier this year.

While there has been no other announcement related to the March meeting either from Champagne or Japan-based Panasonic, the latter is responsible for supplying 4680 cells for Tesla’s Reno gigafactory and is anticipated to want to boost its presence in North America to meet Tesla’s demand. Whether or not a new Panasonic factory will end up in the U.S. or Canada remains to be seen.

The quandary about where to situate a North American battery plant extends to CATL — another key Tesla supplier. The Chinese company is, according to a Bloomberg report, scouting for a location for a US$5-billion factory in Canada, the United States or Mexico. CATL has not commented on its plans to expand in North America.

Neither CATL or Panasonic currently have lobbying activity at either the provincial or federal level in Canada, though both are long-time, prominent partners of Novonix — a battery materials and technology company headquartered out of Australia, but with an established research facility and testing lab in Bedford, N.S.

Novonix was originally spun out of the Dahn lab by former student and now CEO, Chris Burns. Burns is also a former employee of Tesla. Both he and Novonix have been a critical testing partner in Tesla’s battery R&D in Canada, along with providing testing support for some of Tesla’s critical battery suppliers.

“The last few years have revealed the significant potential risks of our country’s reliance on Asian markets for batteries and battery materials,” wrote Burns in an open letter in February 2022.

“In the past number of years, and especially last year, we have seen the commitment to onshoring battery manufacturing as a first step to combat this risk. We must now take the next step in reducing those risks by bringing the supply chain of key materials to power the battery manufacturers in North America as well. Only by doing this can we control our ability to meet the country’s EV goals by 2030.”

Charger billing by time vs. kWh

Last month Elon Musk, replied to a tweet from a Mississauga, Ont., Tesla owner asking the Tesla CEO why supercharging had become more expensive.

“Canada requires charging by the minute vs kWh. We’re working to get that changed,” wrote Musk.

Public documents reflect that Tesla, in addition to the above activity, has been campaigning to have charging regulations changed “with the intention of enabling EV charging station billing on an energy (kWh) basis” with Measurement Canada. For its part, Measurement Canada opened consultations on this topic a year ago.

Rate changes would apply to all vehicles, but Tesla lobbyists note the company wants to ensure that “attention is being paid to barriers facing the adoption of electric trucks.”

No doubt they were paying attention last week when the federal government announced Budget 2022, which included commitments to invest heavily in the three EV-related issues in Canada that Tesla has been long campaigning for: truck adoption, mining and the grid.

The main ticket item in the Liberal’s clean sector investments is an eye watering $3.8-billion investment in developing Canada’s critical mineral strategy that would leverage Canada’s existing mineral reserves and make it more attractive for international investors to participate in Canadian mining projects.

Medium- and heavy-duty trucks got new $547.5 million purchase incentive program with an additional $500 million put towards large-scale and commercial ZEV charging.

In addition the government will put $1 billion put into grid modernization projects of “national significance” across Canada to lower emissions and accommodate extra demand due to EVs, and to establish a Pan-Canadian Grid Council.

With new money coming into the sectors Tesla is primarily interested in, adding an additional lobbyist and policy expert is a logical move. And with meaningful funding now coming in to support development of critical battery mineral mining, Tesla may have more bandwidth to devote to the back end of the EV supply chain with charging infrastructure, electricity regulatory issues and the grid — much like Musk assured the concerned Mississauga driver.

At least in B.C. and Ontario, Tesla’s lobbyist registry documents seems to indicate that this is the company’s next area of vigorous advocacy.

“Provide input and recommendations to government on electricity policy and rate design, particularly where it may impact electric vehicle infrastructure deployment with the intended outcome of increasing the commercial viability of charging infrastructure deployments,” reads one of the automaker’s lobbying goals in B.C.

In Ontario, meanwhile, three out of eight of Tesla’s lobbying goals are centred around the grid and electricity rates:

  • Provide input and make recommendations to the government and its agencies regarding policies, programs, regulations and decisions that impact the demand for and/or adoption of solar energy, battery energy storage and related infrastructure;
  • Engage with the government and its agencies to identify opportunities and propose solutions to reduce electricity costs for large-scale DC fast charging operations, including for commercial truck fleets; and
  • Provide input into electricity market renewal processes including into consultations on matters related to distributed energy resources with the intent of ensuring a fair and equitable marketplace for energy storage and solar services/ products in Ontario.

Tesla has also been exploring micro grids and is currently operating several large-scale energy storage pilots and projects across Canada with the largest installed in Alberta, while several more discrete pilots are underway in Ontario in various multi-unit residential buildings and schools.

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