Heather Scoffield: Canada’s secret EV deal with German automakers sends a bad message
There’s something odd about the shiny new agreements signed with great fanfare by the federal government and German automakers this week.
Volkswagen’s CEO was there in Toronto in real life for the signing with Innovation Minister François-Philippe Champagne, backdropped by none other than German Chancellor Olaf Scholz and Prime Minister Justin Trudeau. Mercedes-Benz executives hovered.
Accolades and adulation followed, with much rhapsodizing about the promise of critical minerals, battery production, electric vehicle potential, emissions reductions and prosperity for all.
But the agreements themselves? Secret. With no solid explanation as to why, or general description of what “Canada” has signed on to. And that’s troubling given the many billions of dollars in government subsidies on the table and the intense effort by Canada’s private and public sectors both to turn Canada’s economy into a world-class electric-vehicle supply chain.
Government officials say it’s because they contain commercially sensitive information.
And that would make sense if the memorandums of understanding contained information about money, or promises thereof, exchanging hands, or if there were commitments made for investments or access to resources.
But it’s not at all clear that is the case.
Instead, there’s plenty of chatter about “exploring” and “sending signals” to the world and establishing Canada as a hub for all points of the electric-vehicle supply chain. And there’s lots of focus on how much energy Champagne has devoted to marketing Canada’s advantage — brandishing our billions and suggesting he will hand them over to foreign investors quite readily.
We also know Volkswagen will set up an office in Canada to deal with battery production, and there’s a suggestion the company will take equity stakes in Canadian mining interests. Mercedes-Benz will “collaborate” on setting environmental standards in the supply chain and in the production of critical minerals.
For sure, the messaging here is clear.
“It’s a really important signal,” says Matthew Fortier, president of Accelerate, a network of companies and stakeholders pushing for a robust supply chain for zero-emissions vehicles.
By having Volkswagen, Mercedes and the German chancellor all show up, they indicate to global investors and Canadian business there will be buyers for Canada’s critical minerals and battery-production efforts, he says.
“This can be a really important part of our industrial future.”
But if this is a public-relations or branding exercise, why all the jingoism at the expense of solid information of intent?
Collectively, the companies and government have left the impression the German companies will have privileged access to the materials Canada has in the ground and the rest of the world will need to buy to make good on the promise of zero-emissions vehicles by the middle of the next decade.
If these minerals are indeed so crucial, and Canada has so much of them, should we not know exactly who aims to control them? Should we not know how Canadian companies can get in on the action, or what kinds of commitments are being made around Indigenous participation?
Critical minerals are in great flux right now, caught up in the vortex of international tensions. China and Chinese interests control the lion’s share of the elements needed to make electric-vehicle batteries. U.S. President Joe Biden has resisted Chinese dominance by insisting electric vehicle production be done in North America – a recent victory for Canada after his initial intention was to favour just American production.
When it comes to electric vehicles, Canada’s ambition is impressive and far-reaching. We collectively aim to develop the mining projects to provide materials for batteries, produce the batteries and make the cars, dominating a regional supply chain from top to bottom.
An activist federal government, via Champagne, has firmly placed itself in the middle of that ambition — and that cuts both ways.
On the demand side, it is using its powers to regulate, tax and subsidize to encourage — and then eventually force — consumers to buy electric vehicles. But demand is outstripping supply, with waiting lists acting as a deterrent.
On the supply side, Ottawa is using its fiscal power, its sway over natural resources and its international reach to incentivize, if not outright pay for, investment in the many parts of the production chain. But the ingredients are constantly changing, driven by aggressive innovation.
Can Ottawa and its incentives keep up to this pace?
Fortier and many others believe there’s a valuable — even essential — role for government in this space, but it comes with massive challenges. Canada is competing for international attention and investment, and so its ability to offer billions in subsidies is central, he says. But so is the need to develop a workable national strategy that expedites approvals, co-ordinates the development of key mining projects, ties in research, development, battery technology, recycling and artificial intelligence.
Canada isn’t there yet, despite the seemingly boundless energy of Champagne.
And no amount of energy removes the need to be clear and accountable for the large amounts of Canadians’ money and resources he is dangling in front of big multinationals in the name of industrial strategy.
At every step, we should know the stakes, the costs, the benefits and the intent.
This article was first reported by The Star