Question Period Note: ZERO-EMISSION VEHICLES AND BATTERIES

What is the Government of Canada doing to be a leader in zero-emission vehicle (ZEV) and battery manufacturing?

• The Government of Canada is acting to fight climate change. It is accelerating its efforts on the path to a net-zero future.

• The government is investing to help the automotive industry transition Canada towards electrification, including retooling traditional manufacturing facilities to produce low- and zero-emission vehicles as well as battery packaging.

• To facilitate this transition, the government is providing consumer incentives, seeking to ensure adequate vehicle supply and to build out more charging and refuelling infrastructure.

• The objective is for Canada to become a global leader in the production of batteries and to develop an end to end battery ecosystem in Canada.

• Climate change is an issue that affects Canadians’ health, their way of life and the planet. That is why the government has announced a plan to exceed Canada’s 2030 climate goal and reach its goal of net-zero emissions by 2050.

• The government has adopted measures to make Canada the most competitive jurisdiction in the world for clean technology companies. These include reducing general corporate and small business income tax rates by 50% for manufacturers of zero-emission technologies, expanding eligible equipment, updating eligibility criteria to exclude some fossil-fueled equipment by 2024, and providing tax incentives for carbon capture, utilization, and storage.

• Through Budget 2022, the government proposed to invest more than $2.6 billion in measures to support accelerating light-duty zero-emission vehicles (ZEVs). It also proposed investments to implement Canada’s first Critical Minerals Strategy, as well as funding to make the country a more attractive destination for critical minerals investment and to secure valuable agreements to increase production of goods such as electric vehicles and batteries.

• As announced in the Emission Reductions Plan, the government set a target of achieving 100% zero-emission light-duty vehicle sales by 2035. This target supports Canada’s commitment to reach net zero emissions by 2050. Currently, the Government is working with stakeholders to design regulations which seek to enable these targets to be achieved.

Canadian ZEV production

The Canadian production mix is expected to pivot significantly by mid-decade towards electrified vehicles. Some companies have announced details of their planned investments in Canada. These include:
• Ford - $1.8 billion in Oakville, for production of electric vehicles;
• GM - approximately $1 billion in Ingersoll to transition to production of electric commercial delivery vehicles;
• Stellantis - $3.6 billion for electric vehicle manufacturing at its Windsor and Brampton assembly plants; and,
• Lion Electric - $185 million to establish a battery-pack assembly plant to better control battery design and make the company more competitive in the heavy-duty electric vehicle market.

Furthermore, significant investments have been made to attract anchor investments in battery material processing and cell manufacturing to build a battery ecosystem, including:

• NextStar Energy (Stellantis/LGES): $5 billion for a battery manufacturing plant in Windsor.
• GM/POSCO: $500 million to produce cathode active materials in Bécancour.
• Umicore: $1.5 billion for a battery materials plant in Loyalist.
• BASF: purchase of land in Bécancour for cathode active materials production.

The recent US Inflation Reduction Act (IRA) (August 2022) provides both significant consumer purchase incentives and significant tax credits to manufacturers whose battery manufacturing takes place in the US itself. This stands to position the US as an advantageous location for future battery supply chain and cell manufacturing investments.

Critical Minerals/Batteries

• The demand for electric vehicles is increasing in many countries. That is why governments are investing in battery supply chains through industrial policy measures, from acquiring access to critical minerals, providing incentives to attract manufacturing companies and by supporting research and development.

• Canada has rich reserves of the critical minerals needed for batteries (nickel, cobalt, graphite and lithium), and to support clean and digital technologies. While adopting a whole-of-government approach to establish a battery ecosystem from mines to mobility, Canada positions itself as a global hub for battery manufacturing by advancing a full value chain approach.

• Building on this, the government proposed Canada's first Critical Minerals Strategy in Budget 2022. It is a comprehensive suite of programming to expand Canada’s capacity to engage in critical mineral projects. Included in the Strategy are planned investments of $1.5 billion to the Strategic Innovation Fund to support infrastructure investments that would assist the development of the critical minerals supply chains, and $144 million towards technology research, development and deployment of technologies and materials to support critical mineral value chains.