Several of our most recent blog posts have been about employment challenges facing the Canadian automotive industry. We’ve addressed issues such as re-training and upskilling during an ongoing transition period wherein internal combustion engine (ICE) powered vehicles are progressively replaced by those driven by electricity (EVs).

Today, we’d like to take a longer-term view of how the auto industry could strategically develop in the next few years. It’s a story with a potentially spectacular upside, and it centres on critical minerals. They’re crucial to EV battery manufacturing, and Canada has them in abundance.

An innovation powerhouse

Our thinking on this subject was precipitated in part by the publication of a KPMG report entitled How Canada could become a global powerhouse in EV production.

First distributed in June 2022, the report stated: “While electric vehicles (EVs) are good for the planet, they could also be good for the Canadian economy. Canada has been building automobiles for more than a century, but the country has an opportunity to leverage its unique assets to build a ‘mines to mobility’ ecosystem to move Canada from a player in the EV sector to a leader. 

Canada has access to many of the critical resources to become a leader: established manufacturers and suppliers, skilled labour, government support, access to critical minerals (notably lithium and cobalt) needed to build the batteries that power EVs, and proximity to the U.S. market.”

A thorough, multi-dimensional analysis

The KPMG report offered an extensive, multi-dimensional analysis of the automotive industry, making the following important points:

• Canada is home to both the raw materials and skilled workforce required for EV production.
• These assets offer a unique opportunity for Canada to convert its existing auto ecosystem to EVs while leveraging its access to the resources required to build the batteries that power them.
• Localized manufacturing – which our automotive industry is already utilizing – will simplify the supply chain while creating opportunities for global trade.
• Several Canadian-based vehicle manufacturers and suppliers have already outlined plans to build electric vehicles and EV components, including batteries.
• Federal and provincial government support continues to be central in securing these investments, enhancing Canada’s attractiveness for future growth.

The role of the Automotive Parts Manufacturers’ Association (APMA)

The KPMG report also highlighted the work of a key FOCAL stakeholder, the

Automotive Parts Manufacturers’ Association (APMA). This organization is, of course, Canada’s national association representing OEM producers of parts, equipment, tools, supplies, advanced technology and services for the automotive industry.

Not only has APMA embraced the inevitability of EVs, through Project Arrow it built Canada’s Zero Emissions Concept Vehicle. This is, as the report stated: “The first full-build concept EV, in which every component is made and designed in Canada. The goal is to unveil a vehicle to potential investors by 2023, and eventually be scaled up to build 50,000 to 60,000 vehicles per year.”

These innovations, and others like them, will power the creation of new clean energy jobs in this country, from manufacturing to mining to recycling.

Positive projections from Clean Energy Canada

A September 14, 2022 report from Clean Energy Canada (CEC) headlined: New modelling finds Canada’s battery supply chain could be a boon for jobs and the economy, assuming Canada takes action. It projected that by 2033:

• Canada’s EV battery supply chain could support nearly 250,000 direct and indirect jobs and add $48.2 billion to its economy.
• When induced jobs are considered (for example, ancillary businesses nearby manufacturing facilities ), a total of nearly 323,000 jobs could be created across Canada and $59 billion added to the Canadian economy.

The Clean Energy Canada report added: “Between 2020 and when the analysis underlying this report was finalised in June 2022, Canada attracted at least $1 billion related to EV battery mineral extraction and materials manufacturing, $5.2 billion related to EV battery cell and module manufacturing, $6.6 billion related to EV assembly, and $1 billion related to EV battery components and recycling.”

Those are big, favourable numbers for Canada and there’s more to come.

Since June 2022, the Clean Energy Canada report concluded: “Canada has seen additional major battery announcements, such as Umicore’s $1.5 billion plan to construct a cathode active battery materials facility in Kingston, Ontario, and recent deals with Volkswagen and Mercedes-Benz to secure Canadian EV battery raw materials while cooperating in other areas such as battery manufacturing.” 

The federal government is playing its part in the effort to mine critical minerals

And let’s not forget that Canada ranks among the world’s top five countries when it comes to battery supply chain potential, largely due to its access to key metals and minerals. That’s another part of the good news story, and there’s more. Our federal government is playing its necessary part. As reported recently in the Financial Post:

“Chrystia Freeland’s second budget as finance minister proposes billions of dollars in new spending to incentivize more mining of critical minerals through investments in infrastructure, tax credits for exploration, and funding to help attract the downstream industries that turn those minerals into products such as electric vehicles and battery cells.

Critical minerals include not only the lithium, nickel and cobalt used in batteries, but a far wider array of elements, from copper to manganese. The budget proposes allocating at least $3.8 billion in cash, plus more in tax credits, between now and 2030, to develop a supply chain of critical minerals.” 

The chart below demonstrates the scope of Canada’s mineral resources – which are considerable – relevant to the EV economic space:  

Conclusion

As the KPMG report concludes: “Once a country has battery cell manufacturing capacity, the rest of the component manufacturing industry will tend to follow suit.”

Canada has an opportunity to position itself as a leader in EV production – from start to finish – and spur a dramatic increase in new jobs and economic growth. But to do it right, Canada must take bold steps and take the lead on a broad, multi-stakeholder approach to EV production. We’ve already gotten off to an excellent start, and the team at FOCAL is proud to support this work and initiative. 

Follow FOCAL to stay informed

We’ve got a lot of work ahead of us and we’re geared up to handle it. Please follow FOCAL on LinkedIn, Facebook, Twitter and Instagram to stay informed about the progress we’re making and gain access to resources and special events as well as funding opportunities for employers.

We encourage everyone reading this blog to share it with their professional networks to best share these opportunities with automotive sector staff and employers. Again, the FOCAL team welcomes your questions and feedback – you may contact us at your convenience.