International Trade Committee on Feb. 2nd, 2022

[Shane Wark]

Okay. I'll be quick.

In 1999 we were at our peak in vehicle assembly in Canada. Following the loss in 2002 of the agreement we had with the U.S., production declined, plants closed, workers lost their jobs and families were upended. I think the history of the trade speaks for itself. It has not been good since the loss of those important trade agreements.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Patzer, you have five minutes.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Thank you very much.

Mr. Kingston, I would like you to clarify a statement you made about supply chains already being in existence for electric vehicle batteries in Canada. I'm wondering if you could clarify that statement.

[Brian Kingston]

Sorry; I was pointing to the fact that there's huge potential to build an electric vehicle supply chain as OEMs build out their North American battery manufacturing to support all of the vehicles they're going to be building. We have all the ingredients. We just have to put in place the strategy.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Okay.

I guess this question will be for you and maybe also for Mr. Vescio. In the CUSMA deal, there was a three-year provision that we could source lithium regionally tariff-free. We heard testimony at the natural resources committee last year that it will take closer to 10 years to get this industry going to the point where it's actually producing something. Are you concerned about that?

[Brian Kingston]

Yes. Absolutely. Some of the other witnesses have pointed out that China has been far more advanced in coming forward with a battery supply strategy. We are behind in building out a critical mineral processing and mining industry in this country. That said, we have the resources and we're a trusted partner of the United States to be a source of those inputs.

So we are behind, absolutely, but I think the opportunity is still very much there, particularly when you look at the forecast for EV production over the next 15 years. This is a fundamental transformation and demand is going to be significant.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Go ahead, Mr. Vescio.

[Gian Paolo Vescio]

Yes. I agree with everything Mr. Kingston said, understanding that the potential is here and it's here now. As I was suggesting before, decisions now are made for the future, and being alive to that issue now, immediately, is prudent. The opportunity is on the upside.

With the measures that we negotiated in the CUSMA, it gives us that runway to be able to attract and find those investments.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Yes. Unfortunately, we're going to completely miss that three-year window to source tariff-free.

What's the biggest regulatory burden that we face to get this battery supply chain going and up and running?

Mr. Vescio or Mr. Kingston, either one of you could answer that one.

[Brian Kingston]

I'm happy to very quickly note—and here I would defer to my colleagues in the mining industry—that the processing time associated with exploring and then opening up a new mine, for example, for cobalt, is very long. It's a process that's dedicated to ensuring that we respect environmental rights and that proper consultation takes place.

That is all extremely important, but the timelines are long in Canada for new project developments. That's just the reality.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Mr. Vescio, do you have anything you want to add to that or is there anybody else on the panel who wants to add to that?

[Gian Paolo Vescio]

I would simply say that the investments needed for that type of mining and that type of processing also need to be anchored on the other side with the production orders and production allocation. There is a bit of a chicken-and-egg situation, and getting around that and seeing the possibility of avoiding those issues will probably bring a little bit more clarity.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Thank you very much.

Mr. Kingston, there's one other issue that I see here. Yes, we're aiming for 100% by 2035; that's what the government has stated as a possibility, but one thing I find interesting is that there's been a study in California showing that 20% of EV drivers ultimately end up switching back to gas. Do you think we could see that happening in Canada, particularly with the climate that we live in?

[Brian Kingston]

I'm very familiar with that study. The primary reason for drivers switching back is the convenience issues related to the charging infrastructure. I would point to that study as a warning for Canada. We've set an ambitious target. We need to build charging infrastructure faster than the rate at which people are buying EVs. All it takes is for someone.... They purchase an EV, they make that decision, they make the investment, and if they have even one or two very bad experiences where they find themselves in a two- or three-hour wait for charging, which has happened in some areas in California, it will very quickly turn them off the technology.

We have to avoid that. We can get ahead of it. If we build out the charging infrastructure very aggressively right now, that won't happen, but it's going to be important.

To your point about Canada having cold weather, battery performance is affected, and we'll have to be thoughtful about how much charging infrastructure we need, particularly in more northern and rural communities, to avoid that situation. That is a worst-case outcome.

[The Chair, Liberal, Judy Sgro]

Thank you, Mr. Kingston.

We'll go on to Mr. Arya for five minutes, please.

[Chandra Arya, Liberal, Nepean, ON]

Thank you, Madam Chair.

First is a bit of a fact: Production is the problem today when it comes to electric vehicles. It is not a sales problem or that there no subsidy for buyers of electric vehicles. So saying that is the reason affecting the usage of electric vehicles is nonsense. Tesla, the biggest manufacturer, sells every car it manufactures. The legacy automakers are very, very behind in electric vehicle manufacturing, but even they are not finding it difficult to make their sales.

Mr. Kingston, I am quite surprised that you endorsed a misleading and partisan attack on the luxury tax as though the luxury tax is preventing people from buying luxury electric vehicles. Where is the production? Where is the supply?

On the question of charging infrastructure, however, I agree with you 100%. In fact, if we had to put more focused investment immediately, it should be on the charging infrastructure. The charging infrastructure should be ready for the Canadian environment.

Mr. MacKenzie, you mentioned that we should focus on vehicle manufacturing first and batteries next, but is it not a fact that $8 billion or $10 billion investments in battery manufacturing in the U.S. are all joint ventures? Anyway, we'll come to that.

Mr. Breton, welcome back to the committee. In the last Parliament, we had good discussions on this issue. As we all know, Canada and the U.S. have this joint action plan on critical minerals collaboration, and the federal government invested in the critical battery minerals centre of excellence, and we are also invested in research and development to advance critical battery mineral processing and refining expertise. The agreement is good; our investment announcement is good. Are you seeing any movement at the ground level on this?

[Daniel Breton]

Are you asking me?

[Chandra Arya, Liberal, Nepean, ON]

Yes, sir.

[Daniel Breton]

I am seeing some movement. I've had discussions with Minister Champagne over the last few months, and I know that the federal government is working very hard to be able to make some interesting announcements.

We've seen some smaller but nevertheless significant announcements in Quebec with Lion, the battery plant, and we are seeing companies that want to invest in either cell manufacturing or battery pack manufacturing, so I'm confident that Canada will be able to land the production of EV batteries.

Obviously, this build back better plan is a threat. I'm convinced that it could defer or deter some investment here and divert it to United States, so that's one thing that is really concerning to us.

If you don't mind my saying, the purported fact that to buy an electric car, you have to spend $100,000 on an EV doesn't make sense. Most people drive electric cars costing between $30,000 to $60,000. This $100,000 nonsense, I can't believe I'm hearing it, or the fact that we're saying that, if we live in Canada, it's really hard to travel when you go across the country in an EV. I drove from Berthierville to Toronto—I'm here in Toronto today—which was 640 kilometres, in a full EV with four people and a dog in the car with no issue at all. There are a lot of misconceptions regarding EVs nowadays.

[Chandra Arya, Liberal, Nepean, ON]

In fact, Mr. Breton, you're right—

[The Chair, Liberal, Judy Sgro]

Very quickly, Mr. Arya, you have 40 seconds left.

[Chandra Arya, Liberal, Nepean, ON]

I'll make a comment then.

Mr. Breton, you're right: The focus of biggest electric vehicle manufacturer today, Tesla, is to go down to a car that the masses can use, and the target price is $25,000. That is the way.

I know there's no time, but we all talked about mines, mineral processing and battery manufacturing, but the time required for approval to operate a new mine is so long. Maybe that is a question that can be addressed by another committee or other people. I don't see any mining representatives here.

Thank you, Madam Chair.

[The Chair, Liberal, Judy Sgro]

Thank you, Mr. Arya.

We go to Mr. Hoback for five minutes.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Chair.

Chair, I think this new format is working fairly well. It looks like we're getting through more people in the time frame that we're getting—so far, so good.

I'm going to start with Mr. Vescio.

When build back better was actually becoming legislation, when did the industry inform the government that there was a possible problem? When did you let them know that they needed to insert themselves to make sure that this didn't go through? Do you have a sense of that?

Maybe Mr. Kingston could answer that question too.

I'll start with you, Mr. Vescio.

[Gian Paolo Vescio]

Yes. I can say that we've been working closely with the government since probably the fall, I would say, when we were hearing the rumours that this type of measure would be implemented. It has been a continuous work—