Industry Committee on Feb. 15th, 2022

[Andy Fillmore, Liberal, Halifax, NS]

Thank you very much. That's extremely concise and very, very helpful.

I'm going to switch to Monsieur Gervais now.

Monsieur Gervais, I'm very happy that you're here. My background is in city planning, so transit and community building. Our government has put a lot of emphasis on greening our cities through EVs and more public transit, and your company is combining both of these things.

Planners talk a lot about modal split or modal share, switching the mode from, for example, internal combustion engine personal vehicles to ZEV personal vehicles, and shifting people out of vehicles entirely and into transit—in this case, electric transit.

I wonder if you have any reflections or predictions on the projected market demand for people switching from gas internal combustion to electric personal vehicles and also the continued growth of the use of transit in Canada.

[Patrick Gervais]

Thank you, Mr. Fillmore. I'm really happy to be here too.

We're at a stage right now where it's not if the transition towards electric is going happen, but how it's going to happen. It's happening as we speak right now. We see more and more individuals moving toward electrification of transportation for electric cars, but we also see it in public transportation, school transportation and heavy-duty transportation. We have companies like CN, which purchased 50 trucks from Lion. We have companies like Day & Ross that are doing transportation. We have a lot of companies that are moving toward electrification.

To me, as of today, everything that does under 400 kilometres should be all electric, because the technology is available now. It's a question of managing change.

There are four things that I say about the success of transitioning towards electrification. First is legislation. The government needs to engage by having zero-emission dates, such as 2030 or 2035, but it needs to be clear. I always like to reference the ACT rule in California.

Second is incentives. However, incentives won't be there forever. Within five to seven years from now, electric vehicles, even heavy-duty ones, will be at the same price as a combustion engine vehicle, but the savings will be huge. It's also a viable business model.

The third one is supply chains. We need to lower our prices.

The fourth one is speed. We need to act fast if we want to keep Canada as a leader. We have everything here to develop that technology in terms of knowledge, and we have other companies, like New Flyer, Nova Bus and AddÉnergie.

We have everything. We have all the critical minerals there. We just need to make it happen.

[Andy Fillmore, Liberal, Halifax, NS]

Thank you very much. I see the red card.

Thank you both for your remarks.

[The Chair, Liberal, Joël Lightbound]

We've gone way over time, but that was quite interesting and I didn't want to stop Monsieur Gervais.

Thanks a lot.

Mr. Lemire, you have the floor for six minutes.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you, Mr. Chair.

Thank you for being here, Mr. Gervais. My first question is for you.

We know that Lion Electric is a strong symbol in the forefront of the Quebec and Canadian economy.

Your president, Marc Bédard, said in an interview that priority should be given to buying locally, that Canada loses out when the minerals extracted to produce the cells are exported to Asia for processing and then returned to North America. He added, “It's the worst of all worlds.”

Can you tell us more about the way you see things and your fears?

[Patrick Gervais]

Of course, we believe that all local economic development must be encouraged. This goes hand in hand with our mission. Because of all the transportation involved, exporting critical minerals and then re-importing them for use in North America, particularly in Canada, is counterproductive to our mission, which is to reduce GHGs. Being able to reduce GHGs matters to us. We have shown that Canadians and Quebeckers are very innovative. We can develop technologies that will allow us to be independent and vertically integrated.

We are ready. We just need good will. I think that everyone has this will, both in politics and in business. As I have already said, it remains to be seen how quickly this will be put into practice.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

However, this is a recent development.

In addition to heavy vehicles, some of the companies here manufacture batteries, charging stations, software, and sensors for autonomous vehicles. It will be possible to integrate into the supply chain a whole ecosystem that is growing rapidly.

Are you satisfied with our current funding model for supporting the emergence of these companies? Earlier, you talked about regulations and incentives to stimulate the production or entry of these companies into the market.

[Patrick Gervais]

Certainly, the creation of a dedicated electrification system or fund would make things much easier. Ultimately, it would be used to finance various projects and businesses. We, ourselves, advocate for the establishment of an electrification fund. There are a lot of innovation programs. A number of technologies can fit into these funds. We really insist on the need for an electrification fund so that electrification is accelerated and all the necessary expertise is available to help these companies develop better.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

For battery or electric vehicle manufacturers who are determined to source responsibly, Quebec becomes an obvious choice. You made this point earlier.

What useful tools could the federal government provide for you to take action? What role do you want to play in this supply chain?

[Patrick Gervais]

I always say that the supply chain is twofold and that each part must be developed. The supply chain must be developed through innovation and technology. We, the big manufacturers, will always be able to position ourselves. Indeed, we will always be able to have assembly plants that will be established in countries abroad.

For example, we are currently building a plant in the United States. Our goal, again, is to reduce GHGs, but also to meet the local sourcing demands that are happening in other countries. If we're working in Canada with various Canadian companies or with companies that are setting up shop here, we're going to be doing engineering development and reinventing the way we do things. Our products, the parts, the components, will be much more competitive, both in terms of price and supply. This will allow these companies to distinguish themselves on the international scene.

In my opinion, this is what will allow us to distinguish ourselves and, as far as the supply chain is concerned, to develop various products.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Do you have any concerns about the supply of critical minerals? Obviously, I'm thinking here of lithium. Are you concerned that we will run out of it? As we know, it is one of the strategic minerals and it is not easily accessible at the moment.

Is this a short, medium, or long-term concern for you?

[Patrick Gervais]

I understand from talking to people in the mining companies that supply is not an issue. I don't think that's the real issue. What we need to do is make sure that the mining companies are well funded so that they can develop their products. Right now, even if they wanted to meet all the demand for Canadian products, this market would not be big enough. So it is still necessary to export.

At the moment, I'm not worried about the supply of minerals. There just needs to be more demand so that we can develop products and keep our minerals here.

That being said, we must absolutely keep them. From our perspective as Canadian companies, that's a certainty.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

With the Build Back Better Act, the US government seems to be moving towards protectionist measures or closing the country's borders.

Are you concerned about not having access to the US market? Is this what is driving you to open a plant in the US? What is your perception of our relationship with the US?

[Patrick Gervais]

We have a very good relationship with the US. However, if we want to be competitive, we have no choice but to establish ourselves in the US to sell our products.

I think we need to do the same thing in Canada. We need to develop an industrialization policy, a kind of “Buy Canadian Act,” to encourage local development.

As I said earlier, if we reduce the percentage of American parts in the United States, we will be able to develop expertise in Canada. We also need to make sure that the companies we work with can export to the United States for integration into different kinds of vehicles.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Then the most important thing is local processing.

Thank you, Mr. Gervais.

[The Chair, Liberal, Joël Lightbound]

We now go to Mr. Masse for six minutes.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

Thank you to the witnesses for being here.

I'm going to continue with Mr. Gervais, because that line of questioning was along the line of the one I want to go, especially if we are thinking that we don't have enough of a domestic market to warrant investment to do the production here and that we're going to export primarily to the United States. Do you have an idea of what percentage that would be?

I've been very lucky to have a committee that's been very gracious over the last number of weeks as my border has been under siege here in Windsor, Ontario, and I can't tell you what fallout from that is still happening right now. What's the point of trying to do some of this when we're utterly allowing our entry points to the United States to be destroyed right now? My concern is not just with regard to competing with the west and the east in terms of Europe and Asia, but also, right now, that we're undermining our market access to the United States.

For Mr. Gervais, and then for Mr. Billedeau, I'd like your comments on that, because I can tell you that some people think that while the border is open now, it was never really closed during COVID. There were actually 5,000 vehicles a day and 4,000 trucks that were always crossing. The only time it was closed during COVID was during the illegal blockade that took place. That is the only time the Ambassador Bridge basically shut down its portal.

We are building new capacity, but now I have Democrats and Republicans who are on the warpath to get rid of any type of potential expansion of investment in Canada. How do we deal with that? That's a very real thing that's taking place. You have legislation with Build Back Better, and now we have a whole bunch of motivated congressional and Senate people who are after that too. I'm trying to get some redundancy into the system with a truck ferry, but what do you think about the current risk that's going on?

We can talk about this, but putting out batteries and trying to ship them to Europe and China is not really our primary market. It's going to be the United States, but right now, if we don't do anything significant to protect our borders, decisions are being made, I can tell you that. I'm on the phone with them every day.

That's for Mr. Gervais first, and then Mr. Billedeau.

Thank you, Mr. Chair.

[Patrick Gervais]

Yes, Mr. Masse, you're totally right. I can't tell you the amount of the percentage. I'm not too aware of the numbers, but I can tell you that, yes, on the different borders, the U.S. market is the big market. We're thinking more about North America.

When I was talking with New World Graphite, they were saying that, for them, it's a North American market. It was the same thing when I had discussions with StromVolt, which is looking not to go into Europe but into the North American market. The Canada-U.S. market is huge, so there is a possibility to work there, but as time goes by, we see more protectionist legislation being put in place. We had discussions in California, where they wanted to have a “buy California” act, and it was, “Come on, you have to stop these things, because we cannot have manufacturing plants all over every state.”

As a country, again, for me, it's the fight on the percentage of parts that need to be in different vehicles. Then, on our end, we have to make sure that we also apply some manufacturing “incentives”, I would say, for Canadian companies to place ourselves, to create a local demand and to develop our expertise, our innovation and to be more competitive. I have always been talking about innovation. We are an innovative country—

[Brian Masse, NDP, Windsor West, ON]

I'm going to switch over to Mr. Billedeau, because I've taken up too much time.

[Patrick Gervais]

Yes, I'm sorry.

[Brian Masse, NDP, Windsor West, ON]

I appreciate that and what you're doing.

Mr. Billedeau, we're known as the secondary market for a lot of European expansion. Those companies right now are looking at Mexico instead of Canada because they're watching our border fail at the moment. The whole point of investing in Canada has been our access to U.S. markets, which we're destroying at this moment. That's also an issue. People don't catch onto that, but that's the reality for European investment. I see it down here every day.

[David Billedeau]

I couldn't agree more that maintaining our economic competitiveness and access to the U.S. market is vital for Canada's economic prosperity. To that end and perhaps unsurprisingly, the chamber doesn't support protectionist measures between Canada and the U.S., our largest trading partner, since such policies could have significant unintended consequences.

With respect to critical minerals and Canada's strategy in this space, I mentioned during my opening remarks that we should explore some sort of strategic stockpiling, similar to what the U.S. has, to get a petroleum preserve that can support Canada weathering any type of short-term supply disruption in this space. But more broadly, in order to ensure that collaboration between Canada and the U.S. continues, we have to work on areas of agreement. A joint action plan on critical minerals between Canada and the U.S. was signed about two years ago, and it is the chamber's view that under this agreement Canada has significant opportunities to be a major continental player in supplying minerals for clean-tech energy supply chain resiliency and digital components vital for cybersecurity. We need to work with our allies in this space, and part of the calculus here is ensuring that vital trade corridors remain open and that there's trust amongst our closest trading partners.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Billedeau.

Thank you, Mr. Masse. That's all the time we have.

We will go to Madam Gray for five minutes.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

That's great. Thank you, Mr. Chair.

Thank you to all of the witnesses for being here today.

My first questions are for Mr. Billedeau of the Canadian Chamber of Commerce.

Mr. Billedeau, I want to go back to a statement put out by the chamber in September 2021 expressing concern that there hasn't been enough talk about how our national security depends on critical minerals, which I fully agree with. Would you be able to expand on where you see the largest threats to our national security as a result of not having a plan around this?

[David Billedeau]

I would, certainly, and thank you for the question.

As I noted in my last comment, Canada indeed has this major opportunity to grow as a reliable partner in supplying critical minerals vital to North American development of clean-tech energy supply chains and digital components vital for cybersecurity. In many of these areas, both Canada and the U.S. currently source required critical minerals as well as finished products from China, which presents significant risks, in the chamber's view, to our shared economic security and environmental priorities. With that in mind, it's the chamber's view that we need to work with our North American partners to accelerate collaboration under the joint action plan on critical minerals and explore the use of incentives and regulatory measures to support the extraction, processing, stockpiling and export of critical minerals, which Canada has an abundance of.