TORONTO — Canada’s automotive industry needs to brace itself for massive transformation over the next decade for it to remain a key driver of the country’s economy, says a new KPMG in Canada report.
“The change is going to be dramatic, even in the next five years,” said Peter Hatges, partner and National Automotive Sector leader for KPMG in Canada, in a prepared statement. “Canada can really play a leading role in this transformation.”
The KPMG report called Canada’s automotive future: Next-generation vehicles will change the industry as we know it explores the state of the industry, what the future holds and offers considerations for Canadian automakers, governments, educational institutions and other industry stakeholders.
With consumers around the world increasingly demanding vehicles with lower emissions, original equipment manufacturers (OEMs) are racing to produce electric vehicles (EVs) that meet legislated emissions mandates and customers’ performance expectations, the report says.
The report says if current predictions are realized, annual global production of electrified vehicles (EVs and hybrids) by the top 12 OEMs will reach as many as 13 million by 2025.
“How we build cars, how they’re supplied, what components go into them, how we maintain them – these will all be completely overhauled,” added Hatges. “And, with all the automated capabilities that these cars will have, you’ll have a second impact where cars and roads will be a lot safer. The change won’t happen overnight, and OEMs will continue to invest in ICE (internal combustion engine) vehicle technology, but the industry, as we know it, will be turned upside down. It’s like going from horses-and-buggies to cars. Everything is going to be different.”
- Road safety: OEMs are investing heavily in autonomous features, which will have a positive impact on road safety, speed regulation and accident rates. KPMG advises governments to seize the opportunity that technological advancements will have in traffic management.
- Infrastructure needs: The report stresses the need for continued investment in Canada’s EV charging capabilities and urges governments to get out ahead of demand and expand the infrastructure.
- Canada’s role in design and manufacturing: Canada is an ideal place for EV design and manufacturing, given the country’s existing automotive expertise plus the more than 200 companies in Ontario currently developing connected and autonomous vehicle technologies.
- Workforce requirements: These developments will necessitate changes to the workforce, with increased emphasis on robotics, AI, sensors, telecommunications, new materials, and advanced manufacturing processes specialties.
- Battery technology: The report looks at the ongoing question of what type of battery will ultimately win out – whether lithium-ion or hydrogen fuel cell – and what it will mean to EVs’ overall cost and performance.
Hatges explained that EVs are “no longer a groundbreaking product. The biggest issues now are the costs of electric cars and the infrastructure and ecosystem needed to support them. But, prices will go down as adoption goes up, especially as people factor in the reduced lifetime cost of not having to fill up for gas. Eventually, people will be able to charge their car at home and near almost any destination.”