Electric Vehicle Manufacturing in Canada

Published on March 18, 2022

Takeaways

Cars and motorbikes will remain the dominant form of transportation in the world, and as such electrifying them is crucial.
Canadian companies have had decades of experience and knowledge buildup in terms of electric vehicles and vehicle manufacturing in general.
Government support programs for the electric vehicle sector can benefit from becoming more agile and fast-moving.

Action

Canada must build up and support more OEMs for electric vehicles, especially for cars. There is a long history of car manufacturing in Canada that should be taken advantage of. The Canadian government must be willing to take risks and invest in potential OEM companies here.

Tell us more about yourself and Damon Motors.

My name is Jay Giraud and I am the Founder and CEO of Damon Motors, and Damon is the future of motorcycling.

Damon is on a mission to revolutionize motorcycling by making it smarter and safer for two-wheeled commuters, which amount to 1.5 billion people daily. It is the largest form of transportation in the world. We look at all the problems and challenges that motorcycling faces in different parts of the world and are redefining a new kind of motorcycling experience that we have built from the ground up.

What are the main trends shaping the future of transportation and how will that space evolve in the future?

Over the next decade, transportation as a whole will not change a lot even though people like to think it will. There have been big trends towards electrification and that is going to continue in a much steeper trajectory than we have seen before. We are going to see improved autonomous vehicle (AV) usage in actual business use cases, such as what we are seeing with Cruise Automation in San Francisco. We will see more of this in the coming decade.

Other than that, there will not be huge changes. You can say that the transportation sector has been evolving in between two ends of the spectrum. On one end of the spectrum is the proliferation of kick scooters and similar battery-powered devices that people ride. That has made up for a whole ton of short commutes, but those short commutes collectively do not put even a measurable dent in global miles travelled. In fact, Uber does not even put a 1% dent in global miles travelled, as big and successful as it and all its counterparts are.

So on the one end of the scale are tiny, short-distance commute vehicles that you stand on or sit on for sidewalk trips, and on the other end of the scale you have vertical takeoff and landing aircraft (VTOL). That area is starting to get to a level of development where people will be able to take short trips in the same way they would in a helicopter, but it will be much more affordable. That could help people make up the distance between one end of a big city to the other end, which could have been two hours of driving that they are now doing in 15 minutes.

However, even at the more affordable end of that scale, that is not for everybody and it also only makes up for a small number of trips. Will that displace 1% of global miles travelled? It will probably only hit 0.00001% of those miles. In the years to come, we will still largely have cars and motorbikes to make up the dominant form of transportation around the world at 44% of global miles travelled.

In the next 10 years, we will have these weird kick scooters to vertical takeoff and landing aircraft, but we are mostly going to have cars and motorbikes.

“Canada has always been a supplier of technological components and parts mainly to American and Japanese automobile manufacturers.”

Canada has always been a supplier of technological components and parts mainly to American and Japanese automobile manufacturers. We have set up shop doing car assembly in Ontario predominantly and doing tier 1 and tier 2 parts manufacturing. In the electric vehicle world, there is a bit of a segue over from Ontario into Quebec. Quebec has Propulsion Québec, which is focused on a lot of motor development and lithium-ion sourcing and battery development, and then over in British Columbia (BC), there is a big hydrogen centre. What some people do not know is that a hydrogen-powered car is an electric car that just stores energy in the form of hydrogen and converts it to electricity that powers an electric motor. There may or may not be a battery in that scenario.

Over here in the west, we have been doing electric vehicles for 35-40 years with companies like Ballard Power, Automotive Fuel Cell Cooperation (AFCC), Mercedes-Benz and a lot of other similar companies around that. There is also Corvus Energy doing hybrid marine batteries for freighters and cruise ships.

“At the OEM level for electric vehicles, Canada has virtually no players.”

Canada does well at the supply chain level. Canada always punches above our weight, especially in terms of the electric vehicle supply chain. It is similar to how we have far smaller budgets and fewer people in the Olympics, but we always take home a disproportionate number of medals. That is something to be proud of. We always punch above our weight but at the OEM level for electric vehicles, Canada has virtually no players. There has not been a Canadian OEM manufacturer of cars ever. There have been a few attempts and I made one of those attempts in 2008. Today, we do have some companies like Taiga making electric snowmobiles or watercraft as well as have ElectraMeccanica, which makes electric three-wheeled cars. Of course, there is Damon Motors in Vancouver making electric motorbikes. That is it at the OEM level.

Canada should be building more OEMs for electric vehicles. We should be focusing on the branding opportunity that is available for a country like Canada, which is already exceptionally good at making cars. Canada has been making cars for foreign manufacturers for decades. We have the resources at our disposal to consolidate those supply chains for local brands.

What has to be done to help build up more OEMs in Canada?

The Government of Canada has to get more comfortable with risk and place its investments in local OEM companies. It takes a year and a half to three years for companies in Canada to attract government capital and government support. Programs like Scientific Research and Experimental Development (SR&ED), the Strategic Innovation Fund (SIF) and the Next Generation Manufacturing Canada (NGen) program are all very long programs. Many government support programs take too long to get going and are highly resource-intensive for startups. The uncertainty in them is high and it discourages startups from even taking the time to apply. Canada can do a lot better at supporting companies, even if they may very well fail. Even if startups fail, they can have spinoff effects that lead to other companies and innovations.

“When the government invests in a company, they should not see it as placing a bet in a company but as placing a bet on the future of the country.“

When the government invests in a company, they should not see it as placing a bet in a company but as placing a bet on the future of the country. The benefits that these investments have will generate tax dollars and return on investment (ROI) even if the company they placed a bet on in the first place is a failure. If Canada did more of that, we would be more of an attractive place to invest in than we are today. Right now, venture capital is not bad and is a lot better than it was 10 years ago. However, it is still nothing close to venture capital dollars in the US.

What is the innovation ecosystem like in British Columbia?

Vancouver is tremendously underestimated in terms of the amount of raw talent we have across the technology spectrum. We have quantum computing and companies like General Fusion having fusion breakthroughs. We have battery companies, cellphone companies, electronics companies and vehicle manufacturers. The number of entrepreneurship-style companies started in Vancouver far surpasses that of the rest of the country. The majority of our economy in Vancouver is made up of companies with less than 100 people. Small companies are always the ones where, at that end of their maturity curve, the majority of innovation occurs. It is usually the case that younger companies take more risks.

Vancouver is punching way above its weight in that regard but we are just not known for this outside of Vancouver, unfortunately.

Why did Damon Motors choose to locate its manufacturing in Vancouver?

Underneath the fairing of our equipment is a large battery pack that weighs about 250 pounds. It makes up the bulk of the vehicle, and it is called HyperDrive. Being the bulk of the vehicle, it is the most core thing that we can build and as such, we cannot outsource that to Foxconn or some company elsewhere. We need this product under our watchful eye and under our unique assembly line designed to be as efficient, safe and repeatable as possible.

For that reason, our manufacturing plant is located 8 km from where I am sitting right now, which is the R&D centre. Our operations are co-located between R&D and manufacturing so as we make changes in the design of the vehicle to improve cost, reduce weight or improve range, we can populate those changes over to the assembly line in the same day and constantly evolve the quality and reliability of the manufacturing.

“The depth of knowledge and experience in making electric vehicles from design to R&D and manufacturing is very high in Vancouver.”

That is the number one reason why we are doing our manufacturing here. Another high-ranking reason is access to cleantech talent. Vancouver companies have been building electric vehicle companies that were spinoffs of hydrogen companies for the last 40 years. The depth of knowledge and experience in making electric vehicles from design to R&D and manufacturing is very high in Vancouver.

The third reason is that as a Canadian manufacturer we do not pay duties or tariffs that US or European companies do when exporting into those markets. That is attractive.

Lastly, the value of a Canadian-made product is extremely high as we are perceived well by the rest of the world. We are thought to build really high-quality things and so that has a benefit for Damon as well. For these reasons, we set up manufacturing here.