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An assembly line making electric vehicles
photo illustration by maclean’s, photo by istock

Canada’s EV Industry Has a Bumpy Road Ahead

Governments and industry have poured billions into Canada’s EV-manufacturing industry. So why is it struggling now?
By Brendan Sweeney

When it comes to making and selling cars, there are two things to remember: First, it’s always political. Second, there’s always more work to be done. I grew up in Ontario’s Golden Horseshoe in the ’80s and ’90s, when the auto industry dictated the ups and downs of daily life. At its peak in 2000, the business of building cars employed more than 180,000 people, comprised 3.5 per cent of Ontario’s GDP and produced more than three million vehicles every year—most of them manufactured within driving distance of my own home. 

The Great Recession of 2008 nearly devastated the auto industry in Canada. Assembly plants owned by Ford and GM closed, along with hundreds of auto-parts manufacturers. Production shifted from Canada and the American Midwest to the South and Mexico. Tens of thousands of Canadians lost their jobs and, in 2019, the closure of GM’s last Oshawa assembly plant marked a dreary end to a lost decade, during which not a single assembly plant opened in this country. 

I had a front-row seat to the industry’s decline while working as research director at McMaster University’s Automotive Policy Research Centre. In 2019 I took the helm of the Trillium Network for Advanced Manufacturing, a non-profit based at Western University, in London, Ontario, that supports the growth of manufacturing in Ontario. I’ve spent a lot of time thinking about how public policy can support a more competitive and renewed auto industry. A few years ago, the answer appeared obvious: the rapidly growing EV industry.

In September of 2020, Ford announced plans to spend $1.8 billion to transform its Oakville plant into an electric-vehicle production hub. The federal and provincial governments committed $295 million each to the effort. Similar announcements came a month later from GM and Stellantis, and soon the good news was pouring in: in March of 2022, LG and Stellantis earmarked $5 billion for Canada’s first EV battery plant in Windsor, Ontario. In March of 2023, Volkswagen announced a $7-billion battery plant in St. Thomas, Ontario. That September, Sweden’s Northvolt pledged to build another battery plant near Montreal. In April of 2024, Honda promised $15 billion for an EV assembly and battery manufacturing complex in Ontario’s Simcoe County—the largest manufacturing investment in Canada, ever. 

Within just four years, dozens of companies announced more than $46 billion of new investment in EV production and the EV supply chain in Ontario and Quebec. They were supported by government policy: the federal Liberals had already mandated that all new vehicles must be zero-emission by 2035 and had developed a mines-to-mobility strategy designed to exploit resources in the mineral-rich north to supply EV production in the south. Altogether, the announced plans represented a potential for 81,000 jobs, and $20 billion in GDP injected into Canada’s economy by 2030. I attended the Honda and Volkswagen announcements, and the optimism was infectious. Federal Liberals and provincial Conservatives even hugged in front of the cameras—support for the booming EV business was something politicians of all stripes agreed on.

But the industry’s bright future grew cloudy in short order. Last April, Ford announced it was delaying production of EVs in Oakville by two years. Three months later it scrapped the plans entirely and announced it would build gas-powered trucks instead. The deferrals and cancellations piled up just as fast the investment promises had. Some projects were paused (a battery-materials plant planned by Belgium-based Umicore) or delayed (GM’s St. Catharines EV plant) or scaled back (GM’s Ingersoll plant). Others, such as Northvolt’s planned battery plant, still hang in the balance; that company is entering bankruptcy proceedings in the United States. To date, only 40,000 EVs have been built in Canada, a paltry number that doesn’t remotely line up with earlier optimism—a single assembly plant ought to build 200,000 vehicles annually. The Canadian facilities of Detroit-based automakers employ 5,000 fewer people today than they did before the EV boom started taking shape in 2020.

The biggest reason for the slowdown is the simplest: EVs are expensive. Though sales are growing—EVs now represent 12 per cent of all new-vehicle sales in Canada—that growth hasn’t been nearly as fast as government and industry expected. It’s not just EVs; vehicles overall have shot up in price due to constricted supply and growing consumer preference for larger, higher-tech pickup trucks and SUVs. According to Statistics Canada, the average price of a new car in 2023 was $55,800, compared to $43,600 in 2019. Those high prices mean fewer Canadians are buying new vehicles of any kind. In 2018 and 2019 Canadians bought more than two million new vehicles. In 2022, they bought fewer than 1.6 million; last year, fewer than 1.8 million. 

EVs face the disadvantage of sitting at the top end of an already pricey market. The much-hyped Ford Lightning pickup truck illustrates that: the least expensive model runs about $63,000, $12,000 more than a basic gas-powered F-150. High prices have reduced demand, which means automakers are having difficulty achieving economies of scale in their EV plants and their supply chains—or they’re producing EVs alongside gas-powered models, keeping prices high. 

Governments have also been slow to make the infrastructure transformation needed to support widespread adoption of EVs. According to a 2024 study by the Natural Resources Canada, 40,000 public EV charging stations need to be installed every year between 2025 and 2040 to support the federal government’s mandate that all new-vehicle sales be zero-emission by 2035. Right now, there are only about 30,000 public EV charging stations across Canada, and only 6,703 new ones were installed last year. 

That means potential buyers are still faced with range anxiety—the fear that their cars will run out of juice before they can recharge. Today’s EVs have far greater driving range than those of just a few years ago, travelling hundreds of kilometres on one charge. But that still may not be enough on long drives if charging infrastructure isn’t as convenient as gas stations. 

All of these headwinds explain why the dream of turning Canada into an EV powerhouse has been deferred. Now comes what could be the biggest challenge of all: Donald Trump. The incoming president has threatened 25 per cent tariffs on Canadian exports to the U.S. He is also virtually certain to eliminate the U.S.’ $7,500 rebate to consumers of North American–made EVs, which take some sting out of higher prices, fuelling more demand. 

The end of rebates will further slow EV uptake. But a steep tariff on Canadian auto exports represents nothing less than an existential threat to our domestic industry. Nearly 90 per cent of vehicles made in Canada are exported to the U.S. More than 60 per cent of auto parts made in Canada are shipped to U.S. assembly plants. A tariff wall has the potential to devastate the automotive industry in both countries, rendering it unable to compete with the far cheaper EVs being made elsewhere in the world, especially in China. 

Consider too that the largest automakers and investors in the EV supply chain—Toyota, Honda, Volkswagen—are based in Germany and Japan respectively. The future of our own auto industry depends on generation-defining investment decisions made in their head offices. The uncertainty of a Trump presidency now makes these decisions far more complicated. 

But this business is always political, and there’s always more work ahead. Over the next few years, that will mean negotiating with a volatile government to the south, securing supply chains for minerals and materials and building up lagging charging capacity from coast to coast. Yes, federal sales mandates look increasingly unattainable, but they were probably always overly ambitious. And it was never likely that every announcement made in the past few years would materialize. EV sales continue to climb, and the long-term outlook is positive—even if the road ahead has turned out to be bumpier than we thought.


Brendan Sweeney is the managing director at the Trillium Network for Advanced Manufacturing.