Evidence of meeting #16 for Environment and Sustainable Development in the 45th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was evas.
A recording is available from Parliament.
President, Global Automakers of Canada
The costs associated with the manufacturers are going to be the costs of purchasing credits to be able to comply with the regulation. As with most things, costs are normally passed along to the consumer at the end of the day.
I'm sure the committee has been provided with the recent C.D. Howe report. It estimated something like $200 million, if I'm not mistaken, in costs just associated with the transition for next year.
Conservative
Branden Leslie Conservative Portage—Lisgar, MB
These are for-profit companies. It's not expected that they'll bear the cost, but it's a really overlooked factor in the entirety of the cost. It seems like the development of an EV system is supposed to be such a cheap enterprise.
When we look at the compliance system, a company like Tesla—an American, Elon Musk-owned company—is one of the few that are simply creating credits because they are not manufacturing hybridized or gas-powered, ICE, vehicles as well as EVs.
Under the proposed, although paused, system and moving forward, will Canadian automakers be paying companies like Tesla millions of dollars to buy these compliance credits if they're not able to sell enough EVs?
Conservative
Branden Leslie Conservative Portage—Lisgar, MB
My understanding is that Tesla had on its balance sheet in the first quarter of last year something like $400 million. Do you know if money has already been transferred from some Canadian companies to Tesla?
President, Global Automakers of Canada
I don't have a line of sight into that. I'm sorry.
Conservative
Branden Leslie Conservative Portage—Lisgar, MB
Okay.
In your view, if automakers can simply buy these credits from Tesla instead of selling the EVs, is this really about reducing emissions, or is it a way to transfer money from Canadian companies to foreign-owned ones?
President, Global Automakers of Canada
It is setting up a structure where there are a number of ways companies can comply. That could be one result, yes, in terms of transferring money in that regard.
Conservative
Branden Leslie Conservative Portage—Lisgar, MB
How transparent would the trading of this credit system be? Would Canadians be able to see who is profiting from and who is paying into this system?
President, Global Automakers of Canada
My understanding is that there's no visibility on that at the moment.
Conservative
Branden Leslie Conservative Portage—Lisgar, MB
We've talked about this being an attempt to drive market signals. It seems obvious to me that many of the companies you represent see the value in the market dynamic that already exists. People in certain areas of this country, for certain reasons, want to buy an EV. They are innovative machines. They make sense for them and their families.
Would you expect your member companies to...? Whether or not the mandate stays in place, or whether it is enhanced or eliminated, are EVs here to stay? Are you expecting that the manufacturers working in Canada will continue to make them? Will the retailers and the dealers that have them in Canada continue to sell them because they want to make money and they think there's a market demand for it?
President, Global Automakers of Canada
Yes. The long-term trend around the world, including in North America, is toward electrification. I would say that electrification probably includes hybrid as well, but that is the long-term trend of where the world is going. There's been probably $1.5 trillion invested worldwide toward this electrification transition.
Conservative
Branden Leslie Conservative Portage—Lisgar, MB
In the context of the Canadian regulations and this mandate, why do you think it doesn't include hybrids? I know some of the companies you represent have focused more on hybrids.
I come from a rural area. Hybrids make a heck of a lot more sense. Why does the mandate not aim to include hybrids?
President, Global Automakers of Canada
Well, I think some of your environmental witnesses would say that the mandate shouldn't even include plug-in hybrids. The inference there is that a plug-in hybrid still emits greenhouse gas emissions by virtue of the fact that it runs on a gasoline engine. That would be the reason I would suggest that hybrids have not been included in the mandate, but are we looking at emissions reduction overall or are we looking at emissions reduction from a specific technology?
Conservative
Branden Leslie Conservative Portage—Lisgar, MB
Right. If it were to be included, it would still reduce emissions. I think that's where we get lost in this conversation: It's the be-all and end-all of “We must completely electrify our entire fleet of our nation's vehicles by a certain date.” I would take the more practical approach of making incremental changes as technology develops and developing the proper supply chains in Canada.
Is it the view of your organization and many of your members that we need to have a practical approach that takes in the considerations of consumers now and into the future and expands hybridization into this conversation?
Liberal
The Chair Liberal Angelo Iacono
Thank you very much.
I'm sorry about that. Time is up.
Mrs. Miedema, the floor is yours for six minutes.
Liberal
Shannon Miedema Liberal Halifax, NS
Thank you to the witnesses for appearing today. I really appreciate it.
Mr. Adams, how many members are in Global Automakers of Canada?
President, Global Automakers of Canada
We have 16 member companies, representing approximately 25 different brands.
Liberal
Shannon Miedema Liberal Halifax, NS
Did every single member agree to the recommendations you're proposing to the EVAS?
Liberal
Shannon Miedema Liberal Halifax, NS
Okay.
We've been hearing a lot of testimony about the need for market certainty and how that really drives investment. It drives risk-taking. It drives scaling up. How can you have that certainty if your proposal is to pause for the next few years so that there wouldn't be any clarity in the direction this country is going when it comes to EVAS?
President, Global Automakers of Canada
Well, I think when we talk about certainty, we need certainty in the environment that we're going to be operating in. Right now, we have discussion, as I'm sure the committee is well aware, in the States, where environmental regulation is essentially being pulled down by the Trump administration. We're waiting for certainty out of the U.S. in terms of the CAFE regulations under NHTSA, which should come either later this year or early next year.
I think the reality is that our companies' product-planning horizons are generally about three years. If we don't know what the regulation is.... We won't know what the outcome of the EVAS review will be until sometime later this year, at which point we'll be halfway through the 2026 model year.