Feds remain confident in their bet on auto industry’s electrification despite slowing sales

Dave Waddell/The Windsor Star

Despite a bumpy first quarter of 2024 that was sprinkled with announcements of slowing electric vehicle sales and production cutbacks, the Minister Responsible for the Federal Economic Development Agency of Southern Ontario Filomena Tassi said the federal government remains confident in its hefty bet on electrification.

With a federal mandate that 20 per cent of all new car sales in Canada must be EVs by 2026, there remains much work to be done with zero emission vehicles accounting for 10.8 per cent of sales in 2023.

The EV car sales mandates escalate to 60 per cent by 2030 and 100 per cent by 2035.

“I think we can get there if we do the things we’re talking about,” Tassi said.

“If we continue to work to meet targets, makes things affordable for Canadians and add the infrastructure related.

“Canadians are aware of the challenges of climate change. They want to do their part.

“We need to make it easier for them to do that. The government has a role to make that transition as smooth as possible.”

The Liberal government demonstrated that belief with several more EV initiatives and tax credits being included in last month’s federal budget that were directly credited for helping land Honda’s $15 billion EV investment in Ontario that was announced April 25.

In addition to various tax incentives aimed at luring EV companies to invest in Canada, the government extended its $5,000 EV rebate program for consumers by another two years to 2027 by topping up the fund by $607 million.

“In this budget, I’m very happy with the investments being made,” Tassi said. “We’re making sure we’re seizing every opportunity that’s available with respect to the EV space.

“With our government’s commitments, and EV being in my file, I can support small business with making the transition or even startups, so they can’t get to the state of being ready to part of the supply chain.”

Having landed four major battery plants in the past 26 months, three of which are in Ontario, the Liberal government is now trying to fill the holes in the EV supply chain.

The federal government has shifted the focus from support based on production, such as for the LG/Stellantis and Volkswagen battery plants, to tax credits for the building of plants by supply chain companies.

The new 10-per-cent tax credit to support EV supply chain investment and a 15-per-cent tax credit for investments for green electricity generation systems are the centerpieces of that plan.

“We know we are at the stage where we’re working with significant investors making these investments,” Tassi said. “This is part of the creation of the supply chain.

“We want to make sure SMEs have the opportunity to enter this supply chain.

“To do that you have to have these conversations with the OEMs to determine where are the gaps. We have leaders working with OEMs about where we should be going and how fill the gaps.”

The Windsor-Essex County Regional Chamber of Commerce welcomed the federal government’s continued support of the EV sector.

Chamber CEO Rakesh Naidu also applauded the incentives in the budget aimed at creating a domestic supply chain for the mining of the critical minerals vital to the EV industry.

“We are pleased with some key elements that will be positive for our region,” Naidu said in a statement.

“New funding to reduce the costs of electric vehicles and funding to develop charging infrastructure are a key part to making sure that the transition over to EVs is as smooth as possible for consumers and businesses.”

Tassi said the part of smoothing the bumps along the road to EV transition is continuing to build charging infrastructure. There wasn’t any additional money announced for that in the budget, but the government had previously committed to providing $1 billion to build charging infrastructure.

“Infrastructure is an important side of easing people through the transition,” Tassi said.

“We have to ensure the supply is there. We’re targeting creating 85,000 charging stations across Canada.”