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Home » Ontario risks losing its auto crown as cheap, green power gives Quebec the EV edge

Ontario risks losing its auto crown as cheap, green power gives Quebec the EV edge

Ontario risks losing its auto crown as cheap

As both provinces race to woo automakers and battery makers, a new quandary could arise

Ontario Premier Doug Ford this past fall spoke at a provincial housing industry conference and told his audience that his province would be at the vanguard of subsequent revolution in automotive production.

“We’re getting to be the No. 1 manufacturer of electrical cars anywhere,” he said.

Similar things are said nearby in Quebec. Economy Minister Pierre Fitzgibbon regularly brags about the powerful combination of his province’s rich mineral endowment and therefore the cheap, low-emission electricity produced by Hydro-Québec.

“If we play our cards right, we could become world leaders during this market of the longer term ,” he said at a news conference a year ago.

In Ontario, which has been the locus of Canada’s auto sector for many years , months have come and gone with none new battery manufacturing projects being announced. But in Quebec, nodes that would become a part of a North American supply chain for electric-vehicle battery production are already shooting up .

In the past week, two international manufacturing giants — General Motors Co. and BASF SE — announced plans to open what would be the continent’s first cathode-making facilities, both located in Bécancour, an industrial port city about 180 kilometres northeast of Montreal.

That adds to the electrical van and bus manufacturer Lion Electric Co.’s planned battery factory outside Montreal. and a number of other battery companies, including BritishVolt Ltd., a United Kingdom-based manufacturing firm that has partnered with Glencore PLC, have expressed interest in building a facility in Quebec.

Meanwhile, Ontario’s leaders still say they, too, are negotiating with international battery and auto companies, insisting that an announcement is months away, possibly weeks.

As both provinces look to woo automakers and battery makers with financial incentives and subsidies, things may raise a replacement quandary for Canada. In their zeal to grab a bit of the burgeoning EV supply chain, will Quebec and Ontario find yourself competing against each other during a race to rock bottom , during which all the purported benefits of industry, from jobs to tax income , fly out the window as companies secure lucrative deals?

“Obviously, i feel Quebec and Ontario are always in competition for the new auto industry,” said David Adams, president of the worldwide Automakers of Canada, a lobby group that represents non-American companies like Honda Motor Co. Ltd. and Bayerische Motoren Werke AG (BMW).

Adams added that having an auto industry in both provinces could even be complementary. If battery manufacturers build facilities in Quebec due to its cheap, low-emission electricity, which will also help entice automakers to create operations in Ontario, which features a diary of building vehicles.

The potential upshot is that Ontario may not be the geographic locus of Canada’s automotive supply chain because the sector begins one among the most important industrial transformations in history, and therefore the major value component shifts from the interior combustion engine to the battery.

At a news conference in the week in Montreal at which GM announced its plans to create its $500-million cathode plant, François-Philippe Champagne, the federal industry minister, portrayed the project as a victory for all of Canada.

“The competition, it’s never between us,” he said, as translated from French, “but it’s really with the various American states.”

The cathode plants will make Quebec a crucial a part of the North American industry again

The cathode plants will make Quebec a crucial a part of the North American industry again.

“That’s a serious shift,” Champagne said, before backtracking and remarking that the factories in southern Ontario — just across the river from Michigan — already tie Canada into a world network of auto plants.

Still, many of us working in Ontario’s auto sector acknowledge that Quebec’s cheap, clean energy gives it a foothold within the shift to EVs. it had been the main factor cited within the week by GM and BASF — both of which have their Canadian headquarters in the Greater Toronto Area — for selecting Quebec because the location for his or her cathode plants.

“We made the choice to place it in Bécancour due to Quebec’s low-cost, but zero-GHG (greenhouse gas) electricity system,” David Paterson, vice-president of General Motors Canada, said in an interview, “which may be a huge advantage, because you recognize that’s an enormous a part of your operational cost.”

Vuk Milojkovic, chief executive of BASF Toda America LLC, a unit of Germany-based BASF, and director of Battery Materials North America, said picking A battery manufacturing site requires companies to seem at energy costs because it’s an energy-intensive process.

“One of the key factors in Quebec, specifically, is that the availability of hydroelectric power at very attractive prices compared to anywhere else in North America,” Milojkovic said about the choice to locate in Bécancour.

But he added his company had acquired enough land in order that it can expand because the electric-vehicle battery industry grows, possibly adding upstream facilities like battery recycling.

“When we invest, it’s kind of with a longer-term view in mind,” Milojkovic said. “It’s usually not just a one-off investment.”

Such facilities represent the missing middle of a North American battery supply chain, which has grown up around mines and recycling facilities which will produce raw materials for EV batteries, and battery cell manufacturing plants.

But the raw materials, like lithium, nickel and cobalt, got to be converted into a crystalline material, referred to as battery precursor, which, in turn, must became active cathode material, a dust, which is what GM and BASF are targeting. GM estimated its cathodes represent 40 per cent of the worth of A battery .

These intermediate steps remain missing in North America, and both GM and BASF decide to import battery precursor from Asia for the foreseeable future.

But the nascence of the battery supply chain has helped spur a tide of investment and excitement that a first-mover advantage can still be obtained.

Neither GM, nor BASF have disclosed how any branch of state may find yourself supporting or subsidizing their projects. Likewise, both the federal and Quebec provincial governments have said they decide to help finance an undisclosed portion of the project, possibly through forgivable loans, but haven’t disclosed any details.

The French language news outlet La Presse reported that Quebec may offer loans to assist finance up to 25 per cent of GM’s total project costs, which might be forgivable if certain hurdles, like job creation, are achieved, with the federal contributing an identical amount.

Such arrangements have also been utilized in Ontario, which hasn’t yet attracted any significant battery manufacturing facilities, but has drawn billions of dollars of investment in other parts of the EV supply chain.

For example, Ford Motor Co. in 2020 announced it might invest $1.8 billion to retrofit an Oakville, Ont., factory for electric vehicles. Ontario and therefore the federal each agreed to supply $295 million for the project, for a complete $590 million investment.

Meanwhile, GM plans to take a position $1 billion in its factory in Ingersoll, Ont., to create electric vans.

The European automaker Stellantis NV has said it plans to create two battery plants to provide its North American operations, and lots of hope this includes A battery plant in southern Ontario. A 2020 agreement with the union at its Windsor factory indicates it might invest between $1.35 billion and $1.5 billion in its operations there.

Quebec’s done a reasonably good job of demonstrating that they need not only the resources, but all of the support to entice all of the battery makers

Although Ontario also features a lower-emission electrical grid compared to other parts of North America, it’s neither as clean nor as cheap as Quebec.

“Quebec’s done a reasonably good job of demonstrating that they need not only the resources, but all of the support to entice all of the battery makers,” said Adams, president of the worldwide Automakers of Canada.

He cited the province’s electricity and its incentives to encourage consumers to shop for electric vehicles as advantages.

An inventory of greenhouse gases by Environment and global climate change Canada puts the difference between the provinces’ respective electrical grids into raw numbers. In Quebec, every kW-hr of electricity consumed in 2019 produced 1.5 grams of CO2 equivalent emissions. The comparable figure in Ontario was 30 grams — about 20 times higher.

Meanwhile, industrial customers in Quebec pay anywhere from 30 to 80 per cent less for electricity than they might in Ontario, consistent with Bryan Purcell, vice-president of policy and programs at The Atmospheric Fund, a non-profit endowed in Toronto that appears to scale back pollution . He cited a study by Hydro-Québec for the info .

“There’s no doubt that Quebec’s grid may be a lot cleaner than Ontario’s,” he said.

Purcell criticized the Ford government’s decision in 2018 to cancel nearly 800 renewable energy projects, which it said would economize . He contends the choice means Ontario will increasingly believe gas , which can make its electrical grid more carbon intensive and, eventually, costlier because the carbon tax kicks in within the decades ahead.

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