As global demand for electric vehicles (EVs) rises, Canada has been actively expanding its battery manufacturing sector. The Canadian government is leveraging tax incentives, abundant critical minerals, and clean energy resources to attract multinational companies and investments.
Recent developments indicate that Canada’s efforts are bearing fruit. Multinational companies such as Volkswagen and Stellantis have established plants in the country, contributing to over CA$18 billion (US$13 billion) in investment.
According to research firm BloombergNEF, Canada now ranks second in the world for battery supply chain, trailing only China.
The Canadian government has recently introduced a 30 percent tax credit for new machinery and equipment utilized in clean technology manufacturing, as well as mining and recycling of critical minerals such as cobalt, lithium, and nickel.
Industry Minister Francois-Philippe Champagne remarked on the significant impact of these measures, stating that the automotive sector in Canada is entering a new era.
Volkswagen has announced plans to build its first North American battery factory in St. Thomas, Ontario, making it the first new manufacturer to establish operations in Canada in 35 years.
Additionally, Stellantis and LG Energy Solution are collaborating on a new battery plant, while French tire manufacturer Michelin is expanding its local facility. General Motors has also secured a long-term agreement with Brazilian mining giant Vale for the supply of Canadian nickel for EV batteries.
Canada’s wealth of critical minerals necessary for battery production, combined with the proximity of its mines to battery factories and auto assembly plants in both Canada and the United States, offers a strategic advantage.
Sarah Houde of economic development agency Propulsion Quebec emphasizes the country’s unique position in having all the necessary minerals for battery production.
The abundance of hydroelectric power in provinces like Quebec, which generates 99 percent clean energy according to government data, is another factor attracting investment in the EV battery sector.
Canada is committed to clean energy as a cornerstone of its climate plan, with incentives worth about CA$80 billion aimed at spurring investments in non-emitting electricity generation, green technologies, and mining over the next decade.
The country is also pushing for the recycling of electric batteries to create a circular supply chain. Several facilities in the country already recycle up to 95 percent of the strategic metals found in batteries, using 97 percent less water than extraction and refining per ton of battery material, according to Louie Diaz of recycling company Li-Cycle.
Companies, such as Li-Cycle, are securing investments from abroad, with the Pentagon recently contributing US$375 million. As Canada continues to compete in the global EV battery market, it will be essential for the nation to maintain a “sustained, accelerated pace,” as noted by Sarah Houde, to ensure they stay ahead of other countries.
Canada’s efforts to bolster its EV battery manufacturing sector have led to significant investments from multinational corporations. The nation’s unique advantages in raw materials and clean energy resources, coupled with government incentives and a focus on recycling, make it an attractive destination for companies in the rapidly expanding EV industry, including the growing electric RV market.