DETROIT—The federal and provincial governments in Canada believe the country's combination of a highly skilled labor force, an existing auto manufacturing base and an abundance of natural resources could make it a hub for electric vehicle battery production.
But becoming an integrated one-stop shop corridor of battery manufacturing would require buy-in from companies throughout the supply chain, industry leaders said. And Flavio Volpe, president of Canada's Automotive Parts Manufacturers' Association, a trade group whose members generate about $35 billion in parts sales annually, said the country must overcome a startup hurdle to make it happen: Canada currently lacks capacity to process the raw materials needed for battery production.
"Is the answer foreign companies like Panasonic or Aisin showing up to make batteries and solve problems related to processing and mining?" said Volpe. "If you're a for-profit company that's publicly traded, you're not going to make a decision like that just because you like the color of the Canadian flag—it's got to make sense."
But Canada already is banking on becoming an EV center for North America and the globe, and it has received plenty of good news on that front. Each of the Detroit 3 are planning major electric assembly investment, offering details during negotiations with the Canadian union Unifor in 2020 and early 2021.
Ford Motor Co. plans to spend $1.44 billion on its Oakville, Ontario, plant to build multiple EV models starting in 2025. The investment includes $590 million in incentives from the federal and provincial governments.
General Motors, meanwhile, will start building electric commercial vans in Ontario this year, and Stellantis plans to add an electrified vehicle to its assembly plant in Windsor, Ontario, by 2024.
But government officials want to go beyond simply building EVs. Ontario Premier Doug Ford has pitched the province as an ideal location for A-to-Z battery production.
"We have the lithium. We have the nickel. We need to manufacture here," he told Automotive News Canada last year as Unifor negotiations were ongoing. "Do you want to be hauling these batteries from a Southern U.S. state up to Canada? Or do you want the batteries manufactured down the street that we can ship in hours, saving millions?"
Experts say shipping batteries and battery components over long distances is indeed a costly logistics strategy. Localized battery production will be crucial for auto makers as they ramp up assembly of electric vehicles, said Carmine Pizzurro, co- founder of EV infrastructure company eCamion.
"The future is having (battery) gigaplants close to the automotive factories," he said in January.
Despite the hurdles, momentum appears to be building. On March 15, the federal and Quebec governments said they would each provide $50 million for a battery plant for commercial bus and truck manufacturer Lion Electric Co.
First Cobalt Corp., of Ontario, owner of North America's only permitted primary cobalt refinery, in December received $10 million in federal and provincial funding to expand its factory in the province. And Windsor has been in pursuit of a $2 billion EV battery plant from an undisclosed company.
"It is very possible for Canada to pull it all together," said Conrad Layson, alternative-propulsion analyst at AutoForecast Solutions. "Canada has the raw materials and the knowledge base. What is lacking is the physical infrastructure."