Better EV Policies Could Jump-Start $110 Billion in Canadian GDP

A shift in policy could jump-start Canada’s domestic EV market, generating nearly 800,000 jobs and $110 billion in GDP by 2040, according to a recent report co-authored by the International Council on Clean Transportation and the Pembina Institute.

“Across the world, automakers are investing billions of dollars to accelerate the deployment of an increasingly diverse mix of electric vehicles to the market,” ICCT Canada lead Ben Sharpe and Équiterre transportation researcher Jessie Pelchat write for Policy Options. Such a surge in investment owes significantly to ambitious policy-making—a lesson that Canada, a global laggard in domestic support for the EV industry, would do well to heed. 

“Canada produces roughly two million cars and light trucks per year and holds a prominent share of global vehicle production,” they write. But the country “is quickly falling behind other countries in transitioning to electric vehicle manufacturing.” At only 0.5% of domestic vehicle production, the Canadian EV manufacturing industry sits at “more than 80% less than the global average of nearly 3%.”

Meanwhile, GM recently announced plans for a US$2-billion conversion at its Detroit-Hamtramck facility, adapting it “to exclusively produce electric cars,” the two authors note. The move leaves workers at GM’s shuttered plant in Oshawa, Ontario in the proverbial dust, along with thousands of other laid-off automotive workers who could benefit directly from strong, made-in-Canada EV policies.

“If Canada doesn’t aggressively try to capture more electric vehicle assembly and supply chains, it risks losing a major pillar of its economy,” Sharpe and Pelchat write.

In a companion study to the ICCT/ Pembina report, Navius Research writes that—federal and provincial EV-supportive policies notwithstanding—“electric vehicle adoption is projected to reach only 14% of new light-duty vehicle sales by 2040, far below Canada’s target of 100%.”

The good news is that the country still has a good chance to catch up, Sharpe and Pelchat say. “A single policy—a national zero-emission vehicle mandate requiring manufacturers to have 30% electric vehicles sales by 2030 and 100% by 2040—could put Canada on a path to fully transforming its vehicle fleet by mid-century.” 

On the consumer side, rebates and carbon pricing could boost the appetite for EVs, the two authors add. Also imperative to making Canada a contender in the global race to take the combustion engine off the road for good: more industry-supportive policies, such as “research and development support, loan guarantees, and tax breaks for new or refurbished manufacturing facilities to produce electric cars and trucks.”