by Noelle Stapinsky
In a sharp turnaround, Canada’s freshly invigorated automotive industry shifts focus to electric vehicle technology
Canada’s automotive sector’s current prospects are a stark contrast to the dire outlook last spring amid the start of the global pandemic. For the automotive industry, this unfortunate circumstance hit during the time of year that it experiences a surge in consumer activity.
With the world in lockdown, consumer spending on big-ticket items all but halted as everyone braced for an uncertain future—and any market growth projections or analytics went out the window.
But beneath all of this uncertainty was a stark reality—Canada’s automotive sector was hurting long before the pandemic hit. Reduced shifts, shuttered plants, old models and new mandates sent to U.S. factories had many wondering if Canada’s auto sector had hit the end of the road.
Fast forward to the fall of 2020, and the whole future has changed. When Unifor, Canada’s largest private sector union, started ratifying its contract labour bargaining with the auto industry’s Big Three—General Motors (GM), Fiat Chrysler Automobiles (FCA), and Ford, all of the negotiations ended with significant investment announcements and aggressive strategies of reconfiguring existing assembly operations to produce battery electric vehicles (BEVs) and traditional ones.
GM announced it would bring pickup truck production back to its Oshawa, Ont. Assembly plant, which was decommissioned in 2019, putting 3,000 people out of work. The automaker now plans to invest up to $1.3 billion in its Oshawa plant and hire about 1,700 hourly workers. This move to support GMs new family of pickup trucks—the company’s most important market segment—will consequently help fund its transition to electric and autonomous vehicles. GM also plans on investing $109 million in its St. Catharines, Ont. facility for engine and transmission production and $500,000 in its Woodstock, Ont. parts distribution centre. All of this came before the surprise announcement in January promising $1 billion to retool the CAMI plant in Ingersoll, Ont. to produce EV600 electric delivery vans.
FCA announced plans to invest $1.5 billion in its Windsor, Ont. plant that currently produces three of its van models. This investment will modernize the plant to build BEVs and plug-in hybrid electric vehicles (PHEVs). For the union, this means the third shift that was cancelled in early 2020 will resume and FCA will rehire 425 laid-off workers and create 1,500 new jobs in the Windsor area.
“With this investment and as vehicles start to roll off the assembly line in 2024, our third shift will be back and we expect that the total jobs will rise to over 2,000 more in the community of Windsor,” said Jerry Dias, Unifor union president in a press release. “The work will start in 2023.”
PHEV’s have been on the market for sometime, but as more consumers become increasingly environmentally conscious the market for BEVs is opening up and OEMs are clearly taking notice with such hefty investments.
According to Robert Cattle, executive director of Canadian Tooling and Machining Association (CTMA), the electrification of vehicles in the auto industry was already a seismic shift before the pandemic happened. “We have now seen Joe Biden elected as President and his administration has drastically different views on climate change and green energy than the former President. I believe that these views will only accelerate the development of electric vehicles from the Big Three and this could be a great benefit to existing suppliers,” says cattle, though he cautions there will be changes to how the sector sources parts and services.
“It’s easy to say that with the electric vehicles there will be less driveline components to produce and that the part makers are going to suffer,” says Cattle. “While I agree with some of these arguments, I also believe that there will be opportunities. Over the past years we’ve seen that light-weighting is crucial to vehicles and we’re going to see continuing involvement in die-casting and other processes as we find new methods to manufacture parts. New models will come forward and they will need trim packages, body panels and other parts. Needless to say, all of the other suspension components and mechanical systems will still need to be made, no matter what mode of power the vehicle uses.”
Brenn Cox, engineering manager of Glider Guard Tool and Die Inc. in Oldcastle, Ont., agrees, “We have to keep in mind that electric drivetrains are somewhat less complex, meaning they require fewer parts than traditional powertrains. With electric vehicles, there may also be some substantial changes to the front end of vehicles—they require less cooling and therefore grilles and such become less complex and require less tooling. This all will likely require a shift in focus for many of us.”
This kind of refocusing—increasing capacity and capabilities to stay competitive—is already common in any shop already supplying the automotive industry. Pivoting to meet the ever-changing technological demands of the auto sector, not to mention its cyclical nature, is business as usual.
“We are optimistic about the opportunities that BEVs will bring. We’re seeing a positive trend in OEMs gearing up for an aggressive BEV marketplace and we think Windsor is centrally located to take advantage of these new models,” said a CTMA member who requested not to be named. “And there should be excellent opportunities for local Tier One suppliers and tool shops. Ontario and the tooling industry must be ready with capacity and skilled workers to handle the OEM commitment to BEVs and to establish themselves as global leaders in electric vehicle production. BEV manufacturing is an avenue to re-shape the auto industry in Ontario.”
Just as vehicles are expensive and difficult to transport, so is the battery technology designed to power BEVs. And since OEMs typically manufacture and have assembly plants close to the market, industry experts predict the supply chain for battery technology will follow suit.
“This is a topic dear to my heart. When I put my international lens on Canada, you see so much opportunity and potential,” says John Laughlin, chief technology officer for NGen, an industry-led non-profit organization that leads Canada’s advanced manufacturing supercluster. “The opportunities are there, certainly within North America, if you talk about what goes into a battery—the raw materials, electrodes, electrode separators and cell manufacturing. These are all things Canada is really strong at.”
Indeed, a supply chain analysis and competitiveness by country by Bloomberg ranked Canada as fourth in the world. “We have cobalt and we’ve also had a big increase in copper,” he says. “When you look at what we need before you even get to the battery plant or start manufacturing it, the real start and the reality is that the majority of that value chain—50 to 60 per cent of it—is all in the extraction, processing and purification [of raw materials] before it even makes it to the manufacturing process. A third of the cost of these vehicles is the battery. There are some really aggressive cost targets in the industry and you can expect that to drop by maybe 20 per cent in the next five years.”
Laughlin was previously responsible for setting strategies and running some of the U.K. government’s highest profile research and development programs across the automotive, aerospace and intelligent mobility sectors. “This has all been shifting for quite some time, but the introduction of BEVs is a pretty big topic. Yes there are the traditional cars, but if you look at long-range vehicles, heavy duty, off-road, rapid transit…even aerospace is looking to more electric aircraft. There are a lot of synergies coming along. And those are just first life batteries. There are opportunities to remanufacture, recycle and use those batteries in a second life. There’s a lot of consideration for these batteries in energy storage and industrial applications,” he says.
Canada already imports $1.9 billion in advanced batteries for energy storage, and it exports $275 million in advanced batteries for marine applications. Needless to say, we already have a market for second life batteries on our home turf.
Cox says, “There will certainly be opportunities for Ontario companies to take advantage of and grow their business. However, with the move towards BEV production, I believe that we will likely see some large, potentially foreign companies move in and gobble up a large portion of the work as Tier One suppliers. Many of the Southeast Asian companies (Samsung, Panasonic, LG Chem) are already in partnerships with OEMs to produce battery technology.”
Laughlin points out that the raw materials used in batteries are all really sensitive to air and expensive to transport. “So buying raw materials from China and transporting them or buying raw materials from Canada and shipping them doesn’t make a lot of sense.”
It’s also important to acknowledge that there is a trend towards more customized battery technology to meet the needs of particular vehicle designs. To transport and store a limited stock of battery technology from overseas would limit OEMs in design and performance.
“This is where we can really demonstrate our capabilities and what we can do in terms of efficient extraction, processing and purification of those materials. And that has potential to lead to Canada’s growth and having battery manufacturing facilities here,” continues Laughlin. “That’s where NGen can help. We really need manufacturers to start adopting advanced manufacturing processes, technologies and business practices.”
Canada, as a country, already holds a big advantage. Not only is it ranked fourth for supply chain demand (according to the Bloomberg report), but it’s also one of the top suppliers for its environmental impact for lithium supply chain. And it has some of the best and most efficient environmental practices.
“When you’re looking at the whole lifecycle of a vehicle, we demand zero emissions. Canada has a very environmental approach. I think this is an important factor as well in this shift. Vehicle OEMs don’t want to be called out again and that will play a big part,” says Laughlin. “Batteries are expensive and highly complex. The traceability of the entire supply chain is very important and the mapping of the lifecycle from a manufacturing perspective is very important. That’s where Canada has some real strengths.”
The development of hydrogen fuel cell technology is also a big opportunity, although, according to industry experts, it’s a little farther out.
But according to an International Council of Clean Transport (ICCT) white paper— Canada’s Roll in the Electric Vehicle Transition—Canada can leverage its leadership in developing hydrogen fuel cell technology for heavy-duty applications. Fuel cell vehicles have longer ranges and quick-fueling capabilities that are well suited for transport trucks and heavy-duty vehicles.
The ICCT white paper identified three key reasons why hydrogen fuel cell production and infrastructure is important for Canada’s competitive position in global electric drive vehicles: Canada’s hydrogen and fuel cell sector is a global leader for pioneering new technologies and industry expertise; some regions in Canada have significant excess of renewably sourced electricity, such as hydro-electric power; and hydrogen fuel cell vehicles are likely to play a critical role in the country’s freight sector because fuel cells are lighter weight and have improved cold temperature performance when compared to battery electric technology.
Of course, as the pandemic rages on with only a flicker of light at the end of the tunnel, 2021 is looking positive in terms of automotive sector growth, investment and new labour deals, not to mention the enormous amount of opportunities for job shops to pivot and join the new game. SMT