OTTAWA — With tides turning south of the border and electric vehicle sales not meeting expectations, Canada’s big bet on EV manufacturing may have been all for naught.
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Since 2020, the federal government entered into deals with 13 manufacturers that, according to a June report by the Parliamentary Budget Officer (PBO), now represent $52.5 billion in various government investments and subsidies across the EV supply chain.
That includes billions invested or pledged to support battery manufacturing across Canada, including plants in Maple Ridge, B.C., southeastern Quebec and two Ontario plants in St. Thomas and Windsor — which in 2023 the PBO said it would take 20 years for the federal and provincial governments to break even on subsidies promised to carmakers, far more than the five initially promised.
“Not all that has been spent, some of it is commitments for the future — so obviously, if those commitments can be rescinded, then we don’t lose it the money that has been spent up to this point,” said University of Guelph economics Prof. Ross McKitrick, explaining that any money that has been spent so far is as good as gone.
“It’s a sunk cost, there’s no getting it back. And for the automobile companies, they’re now looking at the U.S. market as a completely different field. Now the customers will not be constrained in what they purchase, so the companies will make cars for the customers.”
Among the executive orders signed by U.S. President Donald Trump on his first day in office was ending electric vehicle mandates established by his predecessor dictating that 50% of all new car sales by 2030 in the U.S. must be EVs, with a full ban on internal combustion engines by 2035.
With the Trudeau Liberals’ zero emission vehicle rebate program running out of money earlier this month, Canada’s auto industry held a press conference on Parliament Hill last week calling for an end to Canada’s mandates.
Automakers, McKitrick said, lose money making electric vehicles and aren’t keen on being compelled to make them a core part of their business.
“The Canadian Vehicle Manufacturers Association has echoed that. Their whole industry is losing money, they don’t want to be doing this,” he said.
“The argument was simply, ‘Well, you have to, because we’re going to force customers to buy EVs whether they want them or not,’ but the public isn’t buying them.”
While EV sales were indeed brisk in the 2020s, McKitrick said they were typically purchased as second cars for high-income households.
“The (U.S.) mandates wouldn’t have survived because you can’t force one of our largest industries into bankruptcy and not pay a huge political price,” he said.
Nicolas Gagnon, Quebec director for the Canadian Taxpayers Federation, tells the Toronto Sun that investing billions in building an EV industry was too big of a gamble to make with tax dollars.
“That risk was not for taxpayers to make in he first place, and clearly now that risk has increased because of the decision of the United States government,” he said.
“If you really want to encourage industries, give a tax cut to all corporations and let them compete properly — don’t choose players, don’t put taxpayer’s money into risky bets.”
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