How Canada Can Build An Auto Industry of the Future

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What is the big auto industry innovation – yet to be widely implemented – that you are really excited about? 

I am really excited to see the 500-mile electric charge range broken. It may happen for some of the newer models by the end of this year and we may see some real advances in 2024. It will be the opposite of Moore’s Law because batteries are going to get lighter, more productive, and more efficient in terms of carrying holding charges. I am super excited about that. 

“I cannot think of a more exciting time in the automotive space, not since when we first went from the Model T to the sedan model that we are seeing today.”

With electrification also comes the opportunity to reimagine what the interior of some of these vehicles might look like in terms of living spaces, particularly when we factor in semi-autonomy, which is a completely different conversation. We may have robo-taxis that are steering wheel-free and rear-facing. Even for operator or driver-enabled vehicles, with some level of electrification and semi-autonomy, you can do some really cool things with mood lighting, theatre sound, and massage seats. Everyone is getting super creative. It seems like at every auto show we go to there will be somebody presenting some cool new interior design ideas. I am also pretty excited about that, in terms of what a vehicle might look and feel like in the future. 

I cannot think of a more exciting time in the automotive space, not since when we first went from the Model T to the sedan model that we are seeing today. 

How would you describe the current state of the auto industry in North America and Canada, in particular?

Electrification is the big thing. Europe started with some targets for the 2030s and the United States and Canada followed as well. We are all focusing on 2035 as the end of sales for new passenger vehicles that are not electrified. That includes a lot of different designs. There are going to be different phases and targets that are going to begin in the next two or three years, just like there are in California, with several other states that will follow suit.

Canada provides a very significant part of the production of vehicles, as well as the technology that is being developed to create those vehicles. Generally, most major brands globally operate in Canada. Volkswagen has a large facility in Ajax. The Toyota group of companies manufactures as well as sells significant amounts of vehicles here, as does Ford and General Motors.

If we look at specific electrification design in Canada, there is ElectraMeccanica with SOLO, a fascinating company. They are very active in the market and they are building their production facility in Arizona to tap into the US market. Canada is definitely going to see a good, healthy rebound for the light passenger vehicle market. 

What are the main challenges for Canada and its EV industry?

This is true if you look across North America and in any market: the acquisition of skilled labour and educated engineering talent is a major challenge. There is no doubt about it. I was on a podcast recently with the MEMA Suppliers organization. Pat D’eramo, from Martinrea, a good Canadian company, was speaking specifically about the talent shortage and how they have had to move certain operations out of both Canada and the United States down into Mexico to find adequate skilled labour and educated talent. But while that is a challenge in the near term, it is actually an opportunity for the Canadian economy in the long term. 

“The acquisition of skilled labour and educated engineering talent is a major challenge.”

Canada is very proactive with its immigration policy. Frankly, it is one of the leaders worldwide. As the current workforce begins to age, there is going to be a very large push to use immigration as the number one labour source for the country. Canada is an exemplar in this area but it is going to have to compete with all the other countries that are looking to offset this talent shortage. But the United States does not have a flight path to figure out the immigration problem

“If Canada can position itself as a mineral-wealthy, circular economy ecosystem that brings in the best and brightest skilled workforce and educated engineering talent, it could become a major global powerhouse in automotive design and technology.”

We need people. Look at all of the manufacturing environments in the US, particularly in the South, which I call either the battery beltway or electrification valley – who is going to do that work? We in the United States do not have that figured out. Canada, though, has a very active program which has demonstrated some very strong results in years past.

If Canada can position itself as a mineral-wealthy, circular economy ecosystem that brings in the best and brightest skilled workforce and educated engineering talent, it could become a major global powerhouse in automotive design and technology in the next 10 to 20 years and will leapfrog many other countries, including the United States. 

How can Canada play to its advantages in the auto industry and differentiate itself from its competitors?

Canada shares a quality with the United States. The Vancouver area – which I call the Silicon Mountains – actually has some very exciting startup companies there. It is well-positioned to be able to leverage tech, along with other jurisdictions such as the Greater Toronto Area, which has some great high-tech companies. Those high-tech companies, particularly as you look at software-driven vehicle design, are going to play a more significant role. Leveraging the advantage of those jurisdictions, much like how the US has done with Silicon Valley, will be really helpful for Canada.

Canada also needs a very active investment strategy at the federal and provincial levels. Quebec has a very significant relationship with France. It is almost as if they are separate trading partners. So there is a European Union angle via France that could be of great importance for Canada as well as you develop some of your technology hubs. It could be done in and around key universities like McGill University and throughout other areas in Quebec such as Montreal.

However, it is still unclear what the policy is as it relates to manufacturing and in particular to electrification. It is easy to see the design processes of vehicles being based in Canada. However, as the world moves to a more regional and country-based make-to-sell approach, which we are seeing more and more of as we come out of the pandemic, companies might still prefer to build their first plant in the United States or Mexico simply because of the availability of talent or the significant sales marketplace that is afforded.

“Canadian policymakers just need to figure out the right combination of policies to put in place to drive up investments in the auto industry.”

Nevertheless, there is certainly a good base in Canada with very significant companies already operating here. Canadian policymakers just need to figure out the right combination of policies to put in place to drive up investments in the auto industry, in combination with addressing all of the other things I mentioned. 

What should the Canadian government at both the federal and provincial levels do with our policies and regulations to boost our competitiveness in the auto industry?

Canada must double down on immigration and be the leader in attracting a skilled workforce and highly educated engineering talent. Canada must be able to come up with environmentally friendly and eco-balanced policies for mineral extraction as it relates to a circular economy. 

 

If we are really serious about batteries and electric vehicles, we will need to figure out how to remanufacture them, extract the minerals, shape them, and create food from waste. That could be a significant play, both at an economic as well as a policy level.

“Could there be some type of economic enhancement or empowerment location that could be developed to help incubate more vehicle production in Canada?”

The manufacturing space should also try to emulate the electrification focus that certain parts of the United States have. We have fewer labour restrictions in the United States, especially as you move into some of the southern states. Could there be some type of economic enhancement or empowerment location that could be developed to help incubate more vehicle production in Canada?  

The government should also look at additional economic incentives for Canadian citizens to purchase an electric vehicle that is built in Canada. Why not incentivize companies to actually build in Canada, whether by tax breaks or other economic empowerment initiatives? The production aspect of this needs to be addressed as it seems to be persistently lacking. If Canada can bring all of those components together, the future could be very lucrative and rewarding for workers in the automotive space. 

What does the auto industry in Canada need to focus on to improve its competitiveness?

Work with your legislators to make the most of the talent advantage that you currently have. Make sure that plants and operations are not shifting to different parts of North America and other parts of the world. Bet on Canada. Take advantage of some of the tech talent that exists in places like the GTA, Vancouver, and Montreal, and develop that talent. Go deep into the education system to make sure that not only kids but also their parents know that building a vehicle is not just about operating a spot welder. There is nothing wrong with that but there is a bit of a stigma against working in a greasy plant with a spot welder. 

“Whether you are a software designer, mechanical engineer, or electronics programmer, there are great opportunities in the auto industry.”

You could eat off the floor at many of these clean room-enabled electrified vehicle assemblies. They are all equipped with state-of-the-art technology. Whether you are a software designer, mechanical engineer, or electronics programmer, there are great opportunities in the auto industry. I really encourage parents who have school-aged children to really reconsider these opportunities as the industry could present a very lucrative career for your children. The electrified world is very different. There are fewer mechanical parts. Our kids actually know better than us about how to shape things moving forward. So bet on Canada, bet on your kids, and count on the future. 

Everybody must work together to figure out how Canada can find all the right talent and minerals while also building the right remanufacturing and recycling processes to support an electrified and green circular economy. It is not straightforward and does not look like your grandfather’s vehicle. We need fresh eyes on these problems to be able to figure things out together.