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Japanese and North American auto makers and parts makers accelerate EV investment in Canada

Hiroko Murata, Nikkan Jidosha Shimbun (NJD)
February 10, 2021

Unofficial Translation below.

North American and Japanese manufacturers of finished vehicles and parts are accelerating their investment in Canada for electric vehicles (EVs). Flavio Volpe, president of the Canadian Auto Parts Manufacturers Association, cited the easy availability of raw materials for batteries such as lithium and the fact that there are already several clusters of electric vehicle-related companies in the country. Taking advantage of the fact that the country does not have any major finished car manufacturers, the country will focus on building a multinational supply chain.

From 2020 onward, complete vehicle manufacturers are launching electric vehicle-related production plants in Canada one after another. General Motors (GM) has announced that it will start production of five EV models in Ontario, and Stellantis (formerly FCA) will also start EV production in the province. On the Japanese side, Toyota Motor Corporation will begin production of a hybrid model of the Lexus NX at its Cambridge, Ontario plant in 2022.

Mr. Volpe explains that the reason why automakers are becoming more and more active in the field of electric vehicles is because “Canada is in an environment where it is easy to secure battery materials, which are the key to EVs. The provinces of Ontario and Quebec are particularly rich in battery materials such as lithium and nickel. In these two provinces, component and material manufacturers of EVs and lithium-ion batteries are moving into the market, and corporate clusters are already being formed.

Canada is characterized by slightly different characteristics of corporate clusters in different regions and provinces. For example, British Columbia has companies involved in hydrogen fuel cell vehicles (FCVs) and connected cars, Alberta has companies involved in heavy-duty vehicles, and New Brunswick and Nova Scotia have companies involved in battery development and anti-corrosion technology. Mr. Volpe explained the advantages of these provinces, saying, “New companies entering the Canadian market will be able to locate (their factories, etc.) after understanding the strengths and characteristics of each province”.

In fact, in British Columbia, which is focusing on hydroelectric power generation that can be used as a hydrogen production method, “FCV-related business clusters are growing,” according to Volpe, and the province is also making efforts to attract Japanese manufacturers.

However, the revenue from the production of electric vehicles in Canada is still low at $100 million (about 8.2 billion yen). In recent years, however, the number of electric vehicle manufacturers has been increasing.
However, in recent years, there has been progress in building corporate clusters for electric vehicles, and “parts manufacturers in Canada are also gaining strength. In Canada, mega-supplier Magna International is well known, but Linamar, which produces “e-gears” that replace transmissions in electric vehicles, is also accelerating its development.

Mr. Volpe said, “In the future, when EVs are mass-produced, there will definitely be opportunities for Canadian parts manufacturers. We will nurture suppliers in preparation for that time,” he said, adding that he will work on both sides to attract overseas parts manufacturers. The plan is to grow the revenue from electric vehicles to $4 billion to $5 billion (330 billion to 410 billion yen) in the next 15 years.