Canada's minister for innovation, science and industry, François-Philippe Champagne, continues to defend his government's increasingly embattled $100 billion strategy to build an electric vehicle (EV) industry, claiming his critics lack “vision and ambition.”
The development of a Canadian EV ecosystem, from mining of critical minerals used in vehicle batteries through to the building of assembly lines for the cars being manufactured, will create a critical competitive advantage for the country "for decades to come — but not overnight," he said, in an exclusive interview with Canada’s National Observer.
"It's normal," he said. "Look at Tesla, one of the biggest EV companies in the world: it took 17 years for them to turn a profit – and the U.S. poured billions of dollars into that company, and they faced serious financial difficulties more than once."
Between October 2021 and April 2024, a total of $46.1 billion in investments across the Canadian EV supply chain was announced by automakers including Honda, VW, GM and Ford, with a further $52.5 billion in support coming from federal and provincial coffers, according to Canada's Parliamentary Budget Officer, which is responsible for providing economic and financial analysis to the government.
"For Canada's automotive sector, the past two or three years have been transformational," Champagne said at the Sustainable Finance Forum in Ottawa on Friday.
But, transforming an automotive industry that had been built and operated for over 100 years around the internal combustion engine to one that manufactured battery-powered car models, of course, requires adjustments, he added.
Since April, when Honda announced Canada's largest ever single investment in its automotive sector — a $15 billion spend intended to underpin the construction of four industrial facilities including an EV manufacturing plant — the sector has suffered market headwinds.
Pull-back by GM and Ford on plans to start manufacturing electric models at Ontario plants, as well as the market travails of Quebec battery-maker Northvolt and e-schoolbus manufacturer Lion Electric, have been flagged by detractors of the government's EV strategy as signs of trouble ahead for the sector.
A recent report from EY, a consulting firm, found consumer appetite in Canada for EVs appears to be "leveling," with only half of the 48 per cent of Canadians expecting to be shopping for a new car in 2025 likely to be considering an EV, down 2 per cent year over year.
“Time should now be spent focusing on infrastructure and delivering a more efficient user experience to position Canada well for EV transition," said the report authors.
Canada is the world’s leading supplier to the lithium-ion battery supply chain, with Bloomberg New Energy Finance, a research house, placing the country ahead of China in its annual ranking.
“Tectonic technological shifts”
Champagne said the changes being driven by the global energy transition would be as far-reaching as in the first Industrial Revolution.
“From changing consumer preferences to building new supply chains and green charging infrastructure, these are tectonic technological shifts, the history of the world shows this,” adding that adopting the steam engine for industry and transportation during the 19th century “took time too.”
But he insisted EV naysayers are short-sighted. "Canada's EV sector has all the fundamentals to succeed in the world of the 21st century," said Champagne. "Our 'North Star' is decarbonization, and EVs will be a big part of this.
“When I talk to automakers they are thinking very long-term. Not how things are today, but how, if they don't invest now, they will look back and see it only as a missed opportunity."
The Canadian government has set a target of having 100 per cent zero-emission vehicle sales for all new light-duty vehicles by 2035, as part of its 2030 Emissions Reduction Plan.
Champagne acknowledged that automakers planning to build EV ecosystem manufacturing facilities in Ontario had in recent discussions expressed concern about market uncertainties, particularly in light of Donald Trump's return to the U.S. presidency.
“Certainly, there are people looking at the future of the U.S. Inflation Reduction Act,” the multi-hundred-billion dollar tax relief initiative launched by the Biden administration in 2022 to accelerate the uptake of clean energy projects and infrastructure.
"That has been a catalyst for significant investments in North America, not just the U.S. but also Canada. Some, including some Conservatives, may not see it, but the world does," he said.
Champagne said the scale of investments by EV-related companies in Ontario in the past three years reflects the perception of Canada as a stable market environment for capital projects.
"In a world that is fraught with disruption, wars and political tension, Canada offers stability, predictability and the rule of law for investors, which is in high demand and short supply," said Champagne.
Champagne, who was Canada's minister for international trade in 2017, believes there will be ways to defuse Trump's bombastic threat to impose a 25 per cent tariff on all products coming from Canada, including auto parts and critical minerals such as the lithium, cobalt, nickel and graphite that are key ingredients in batteries and other green technologies.
"When we speak with our American counterparts, the conversation is around security, supply chain resilience, and a growth agenda for North America — energy, industry, mining, manufacturing. So we have shared interests and this will help us address any such issues" around tariffs, he said.
Critical minerals — where latest government figures show Canada has a positive trade balance with the U.S. at $25.3 billion, up 23 per cent on the year before — could, Champagne agreed, be a “trump card.”
“Critical minerals are in batteries, semiconductors, renewable energy technology and defense applications — and we are the only NATO country that can supply the full suite. So we are well-positioned in this regard,” he said.
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