U.S. and Canada now competing on EV production

With cross-border auto tensions now in the rear-view mirror, Prime Minister Justin Trudeau is talking about Canada’s next big bilateral challenge: head-to-head economic competition with the United States.

From a Canadian perspective, the first two years of President Joe Biden’s term were all about countering a persistent bout of U.S. protectionism by preaching the virtues of trade between like-minded partners.

Something sank in. Biden’s panic-inducing plan to energize electric-vehicle sales brought Canada and Mexico into the tent at the 11th hour. And Treasury Secretary Janet Yellen even coined a new term — “friend-shoring” — to placate America’s anxious allies.

But to hear Trudeau tell it, none of that means Canada is about to pull its punches in the coming battle for sustainable growth, higher-paying jobs, foreign investment and international talent.

“Competitiveness with the U.S. has always been a challenge for us — it was a challenge under Trump, it was a challenge under every previous administration,” he said in a year-end interview with The Canadian Press.

“We’ll always figure out ways to make sure that the Canadian advantages” — plenty of room for growth, he said, along with a reliable, diverse and well-educated workforce that comes with built-in health care — make Canada “an extremely attractive place to invest.”

Trudeau mentioned two specific examples.

Steel giant ArcelorMittal Dofasco is converting its plant in Hamilton to make it less carbon-intensive, using electric arc furnaces instead of coal-burning blast furnaces to slash annual carbon emissions by as much as 60 per cent.

The project, funded in part by the federal and Ontario governments, will make it the first major steelmaking facility in North America to make the switch, coming on line in the next four years.

And GM Canada announced last month that its assembly facility in Ingersoll, Ont., would become the country’s first to produce nothing but electric vehicles, with a target of 50,000 vans and trucks a year by 2025.

Critical minerals, the battery building-blocks so integral to 21st-century transportation and technology, are central to competing with the U.S.

Canada jumped three spots to second place in BloombergNEF’s annual ranking of players in the global lithium-ion battery supply chain, thanks to a healthy supply, growing North American demand and robust upstream clean energy.

The federal government has committed $3.8 billion this year alone to foster mining and processing efforts, as well as component manufacturing and EV production. Chrysler parent Stellantis has partnered with LG on a $4-billion EV plant in Windsor, while Volkswagen and Tesla are also kicking Canada’s tires.

The country ranks second only to China, the world leader in battery metals refining, which is home to 75 per cent of all battery manufacturing capacity worldwide, as well as virtually all of planet’s anode and electrolyte production.