EV Sector is Red Hot
Ontario is the only place in North America that is home to five major automakers, so it is no surprise that the Canadian media is often abuzz with investments related to electric vehicles in Ontario. Between Ford, Fiat Chrysler Automobiles (FCA) and General Motors, the first two automakers have already announced significant investments toward production of electric vehicles in Ontario. Volvo-owned Polestar is the second EV-only car brand that is currently building a retail presence in Canada’s major cities, including Toronto, and will be offering the fully electric Polestar 2 to consumers. This past September, Walmart Canada announced that it is tripling orders of Tesla Semi trucks to 130 as part of the company’s larger strategic investment in Canada. Despite already having the largest fleet of electric buses in North America, the Toronto Transit Commission (TTC) Board has approved an additional purchase of 300 hybrid and 300 fully electric buses as part of a $550 million investment package.
The importance of the federal and provincial government investments in ensuring that the Ontario based original equipment manufacturers (OEMs) commit to manufacture electric vehicles in Canada cannot be underestimated, regardless of your political stripes. Experts agree that the pandemic has accelerated the shift toward the adoption of electric vehicles in the auto industry. Volvo CEO Håkan Samuelsson stated that the company has committed to launch an electric vehicle every year for the next five years, with the goal of having 50 percent of its sales volume become electric by 2025. That is a bold commitment, but just one among many from automakers that see zero-emission vehicles as the future. The Canadian government has realized that the EV sector is one that can play a significant role in economic recovery and is committed to supporting Canadian consumers and businesses that want to transition to electric vehicles. The throne speech in September included promises to make zero-emissions vehicles more affordable, along with investments in charging stations across Canada. Most importantly, from an investment perspective, the federal government has created a new fund to attract investments in making zero-emission products and introduced a 50 percent reduction in corporate tax rates to encourage companies to invest in Canada and create jobs.
Even before the pandemic hit, the Canadian government was laying the groundwork for investment in electric vehicles. For example, Canada was the first country in the world to sign the Drive to Zero initiative by CALSTART in May 2019. The mandate letter by the Minister of Infrastructure and Communities included a promise that the federal government will only finance zero-emission buses and rail rolling-stocks, beginning in 2023. Moreover, the letter also committed to invest in 5,000 new zero-emission buses for transit agencies and school boards. The government investments aren’t limited exclusively to the purchase of electric vehicles or buses, but also focus on building the required infrastructure, such as electric chargers. The Canadian government is investing upwards of $300 million to build a coast-to-coast network of fast chargers in public places, of which $8 million will be invested in Ontario to build 160 fast chargers across 73 locations.
In addition to the public and private investment, the Toronto Region offers an environment that complements all aspects of the slow but steady global transition toward the adoption of zero-emission technology. This includes our strengths in natural resources, a resilient supply chain, research and development talent, manufacturing capabilities, and our proximity to five OEMs.
We are home to North America’s largest Lithium-ion battery recycler, Li-Cycle, which has developed chemical technology that can recover at least 95 percent of all lithium-ion battery minerals, such as cobalt, nickel, manganese and lithium. The first EV battery-grade cobalt refinery in North America is located in the fittingly-named town of Cobalt in Ontario. Ontario is also home to Glencore and Vale Canada, operating mines in Sudbury, one of the largest producers of nickel sulphide. The Toronto Region is home to Canada’s top engineering and tech talent, with hands-on experience working for innovative companies such as GM, Magna, Siemens, Uber, Linamar and BASF. The five OEMs in Ontario are GM, FCA, Ford, Honda and Toyota, and collectively they produced 1.9 million vehicles in 2019, while employing over 100,000 employees. Popular models built in the region include the Honda Civic, Ford Edge, Chrysler 300 and Toyota Corolla. As a trading nation, it is important for Canada to have global market access. Through 14 free trade agreements covering 60 percent of the world’s GDP, global companies doing business here benefit from preferential access to global markets and strong supply chain integrations, in addition to easier labour mobility thanks to the government’s business friendly immigration programs.
Opportunities for International Companies
At Toronto Global, one of our objectives is to build awareness about the Toronto Region’s strengths internationally and assist businesses in their expansion plans to the region. When it comes to the electric vehicles sector, we see several opportunities for international companies to expand here as part of their growth strategy. Opportunities range from battery recycling technologies, building charging infrastructure, electric grid integration, battery management software and, of course, manufacturing of electric vehicles themselves.
However, the largest business opportunity that our region offers today is the opportunity to procure a contract with one of the regional transit agencies looking to electrify their bus fleets. In the last few months, we have seen several announcements from regional transit agencies on their plans to replace existing diesel-based buses with zero-emission buses, with the support of the federal government. Earlier this year, the Canadian Urban Transit Association surveyed its members to understand their appetite and readiness for transition to zero-emission fleets. The survey found that between 2020 and 2024, respondents intend to procure over 5,000 new buses, of which just under 40 percent would be fully electric buses. Perhaps not surprisingly, this percentage jumped to 86 percent for the period of 2025-2029. In the next blog, we will elaborate on the potential that regional transit agencies offer to international electric bus manufacturers.