Ontario’s initiative to establish a comprehensive electric vehicle (EV) supply chain, previously a key priority for Premier Doug Ford, has encountered setbacks with manufacturers postponing or scrapping their plans. Consequently, the government is now shifting its focus towards alternative battery demands to sustain the project.
Initially, Ford and the federal government had secured agreements to introduce three EV battery plants in Ontario, representing substantial investments. The objective was not only to integrate these batteries into locally manufactured EVs but also to utilize components sourced from Ontario and minerals extracted and refined within the province.
Despite the early enthusiasm surrounding the project, several developments have dampened its prospects. Honda, which intended to construct an EV battery plant and produce electric vehicles in Alliston, delayed the project citing reduced demand. Umicore also halted its plans for a cathode plant in eastern Ontario, while General Motors ceased the production of its BrightDrop electric delivery van in Ingersoll. Additionally, Ford postponed the production of electric vehicles in Oakville in favor of gas-powered pickup trucks from its F-Series line.
A potential threat to Ontario’s automotive industry, as perceived by the premier, arises from a recent trade agreement between Canada and China. This deal involves the elimination of almost all tariffs on Chinese EVs in exchange for reduced tariffs on canola from China. While some experts argue that access to more affordable Chinese EVs could stimulate demand and benefit the domestic industry in the long run, uncertainties around rebates, federal EV sales mandates, and Canada-U.S. trade are causing a decline in investor confidence in Canada.
Stellantis, however, is adapting to the changing landscape by repurposing its NextStar Energy facility in Windsor, a joint venture with LG, to manufacture batteries for energy storage in response to evolving market demands. This strategic shift, according to NextStar CEO Danies Lee, aligns with current market conditions, emphasizing the opportunity to cater to storage battery needs and other applications like AI-powered devices while awaiting the resurgence of EV demand.
Economic Development Minister Vic Fedeli expressed support for Stellantis’ revised approach, emphasizing the importance of maintaining the end-to-end EV supply chain in Ontario, albeit with a temporary emphasis on storage batteries. Fedeli highlighted the necessity of utilizing minerals mined and refined in Ontario for these storage batteries, as well as components like separators produced within the province.
Fedeli clarified that the government aims to facilitate companies in establishing operations in Ontario without intervening to boost the EV market specifically. The primary focus is on creating job opportunities, irrespective of the product being manufactured.
The overall outlook for EV demand in North America, as projected by Joanna Kyriazis, director of policy and strategy at Simon Fraser University, is anticipated to rebound in line with global sales trends. Despite the current slowdown, industry experts like Sam Fiorani foresee a future rise in demand for EVs, necessitating capacity for their production. In the interim, the emphasis on battery and stationary storage solutions is viewed as a viable option to offset the existing investment in battery production.
Volkswagen’s PowerCo facility in St. Thomas, a forthcoming EV battery plant, is also considering the production of storage batteries alongside automotive battery cells. This strategic diversification aligns with market dynamics and potential future energy storage demands.
In summary, the shift towards battery storage technologies presents a strategic opportunity for Ontario, especially considering the projected increase in electricity demand and the growth of EV manufacturing and data centers supporting AI applications in the province. The focus on battery storage not only ensures a reliable electricity supply but also presents growth opportunities in the evolving EV and energy storage sectors.