Exploring Canada’s geopolitical hurdles, charging infrastructure challenges, and consumer misperceptions in the development of a sustainable automotive future.
The climate crisis is an immense challenge facing the global community, with much of the world grappling with extreme and devastating weather events. Countries are searching for innovative policy solutions to the collective carbon emissions problem.
The Canadian government’s plan is an ambitious one: a reduction target of net-zero emissions by 2050. As transport constitutes more than 20% of CO2 emissions, clean transportation, including electric vehicles (EVs), is a key part of the government’s agenda for addressing this global challenge.
"Many G7 nations have the same goal,” says Gal Raz, Ivey’s Associate Professor of Operations and Sustainability and outgoing Associate Dean of Research. “The US Inflation Reduction Act, passed by the Biden administration, led the way to many nations trying to compete on actions to stimulate EV supply and adoption in their countries. As Canadians, we should ask, can Canada become a leader in the EV space and what should be done for that to happen?”
Raz led an engaging discussion with three leading energy and automotive experts. They discussed how Canada can lead in the development and adoption of EVs, amid extreme competition on the global stage and stubborn consumer perceptions, and the immediate actions needed by the government to accelerate progress.
Navigating the geopolitics
The panelists kicked off the discussion with an assessment of Canada’s overall readiness for EVs.
“Canada moved up from thirteenth place last year to ninth this year,” says Rachel Doran, Vice President of Policy and Strategy at Clean Energy Canada, referencing Ernst and Young’s Annual EV Readiness Index report. “That means there are things to do on the supply side, the demand side, and on the policy side to really get ready.”
China retained its position at the top of the Index, remaining dominant in production and infrastructure. “There’s a real challenge with the dominance of China, historically, in the supply chain and what they can do to impact our ability to benefit economically from the transition,” adds Doran.
China is the largest producer of graphite, an essential raw material for EV batteries, and they’ve recently tightened their control on exports. “It’s the last piece of the puzzle, which is going to be a very significant problem,” says Flavio Volpe, President at Automotive Parts Manufacturers’ Association.
Experts have also raised the alarm on China’s automotive investments in Mexico, a strategy that will likely cost Canadian auto parts makers both profits and jobs. Many of these Chinese companies are believed to be state owned or financed, so unlike Canadian entities, “they’re not really worried about return on investment (at least not in the short term), they only care about market acquisition,” explains Volpe.
The situation highlights how Canada’s economic and environmental policies are increasingly at odds. Historically, it’s been economically beneficial for the Canadian auto sector to align with the U.S. China’s accelerated global strategy, however, will challenge this status quo and affect Canada’s ability to achieve their environmental goals. It’s a complex geopolitical situation that calls for immediate government action and leadership.
Charging up
Addressing Canada’s EV readiness, the panelists also point to the often-discussed topic of charging infrastructure, a major pain point for EV adoption.
Installing home EV chargers can be challenging in many urban areas, especially for those living in large apartment or condominium buildings. Several European countries, including Norway and Germany, have made policy changes, allowing owners and tenants of multi-unit dwellings to install chargers without having to seek approval from the building or homeowner associations. Adoption can be achieved much quicker if consumers are given the authority to install chargers without facing an extra layer of bureaucratic barriers.
“If you want 100% of Canada to be EV ready by 2035, and have that steep adoption curve, we need those regulations here, now,” says Raseeka Rahumathulla, Manager of Government and Regulatory Affairs at Volkswagen Group Canada, on city and provincial regulations to equip new urban and residential developments with EV charging requirements. “And it's six times cheaper to build it right the first time, and have it wrapped and ready, than it is to try and retrofit something after the fact.”
In addition to addressing the charging challenges faced by those in densely populated, urban areas, an infrastructure plan must be developed for charging in rural and remote areas. Rahumathulla suggests that consumers who are willing to purchase their own chargers should be offered a bigger tax incentive, because it alleviates some of the burden on public charging infrastructure.
As for large scale private investment, she notes, “we're in a world where it's actually hard to pencil a business case to build a charging station...We need good data so that we know where Canadians are actually driving, so that you can get the critical volume you need for that [charging] location.” Acquiring this data and achieving critical volume for chargers in rural and remote areas will be a challenge.
Another significant roadblock is demand charges, an outdated pricing scheme used by utilities to price electricity and that penalize investments in EV charging. Unsurprisingly, these rate structures are not easy to fix in our current provincial regulatory scheme.
But Rahumathulla adds, optimistically, that B.C. and Quebec utilities have tested some experimental rate structures to address the outdated pricing structures. “We need more of that level of thinking…if we want to see private sector investment.”
Tackling the consumer perception
There are other challenges to EV adoption, including the stubborn perceptions of consumers.
For instance, many consumers underestimate the distance that EVs can travel on a single battery. More concerning than the misperceptions themselves, are the lack of channels for accurate information to be disseminated. “Where are the nodes in the system where people can get accurate information? Is it at dealerships?...Who are the trusted sources to share this legitimate information?” questions Doran.
To achieve the significant adoption needed to have Canada EV ready by 2035, collaboration between all levels of government, the private sector, and consumer advocacy groups is needed. The government must play a pivotal role in setting clear policies and offering incentives that encourage EV adoption. “Solving these challenges, with all three levels of government, that needed to start yesterday,” says Rahumathulla.
Without collaboration between governments and across sectors, it will be increasingly challenging to build robust charging infrastructure and for Canada to compete on the global, environmental stage. Additionally, awareness must be generated among consumers to address misinformation and move the dial on EV adoption. Leveraging trusted consumer advocacy groups is one approach to disseminating information to consumers, addressing their concerns, and facilitating public discussions with political leaders. “We get our most trusted people to spread the message, so we can focus on some of the other tangible problems,” said Doran.
Canada’s environmental goals are ambitious, but with immediate action and the proposed collaboration, progress can be made.
Brigitte McIntyre MBA’23, is a Research and Policy Analyst at the Lawrence National Centre.