Evidence of meeting #42 for International Trade in the 45th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was vehicles.
A recording is available from Parliament.
President and Chief Executive Officer, Canadian Vehicle Manufacturers' Association
That's correct: 90% of what is built here is destined for the U.S. market. There is no replacement for that market.
Conservative
Jacob Mantle Conservative York—Durham, ON
Thank you.
You made a comment in your opening statement that diversity is not an option. We have heard repeatedly from the government that Canadian auto manufacturers will build vehicles in Canada and export them to other markets around the world—other markets than the United States. Is that a reasonable possibility?
President and Chief Executive Officer, Canadian Vehicle Manufacturers' Association
No. There is no business case to build cars in Canada and export them to markets around the world. The U.S. is the most important market. It is the closest market. It's the only market that makes sense for large-scale auto manufacturing.
To give you a really tangible example, one manufacturer that tried to diversify a product it was building in Canada was able to get about two weeks of production, at maximum, to markets around the world. The rest was dedicated to the United States. That was with great effort.
There is no world in which we diversify and export vehicles from Canada to the world.
Conservative
President and Chief Executive Officer, Canadian Vehicle Manufacturers' Association
That's correct.
Conservative
Jacob Mantle Conservative York—Durham, ON
I want to ask you about the tailpipe emissions standard that the government revised recently.
Previously, the government had mandated sales of EVs, of zero-emissions vehicles. Now, there's no mandate, but the emissions standards have been tightened. Am I understanding the state of play correctly?
President and Chief Executive Officer, Canadian Vehicle Manufacturers' Association
The mandate is still technically in force. The intention is to do away with it and then tighten the stringencies of the tailpipe standards. That has not happened yet. We are still waiting for the government to table its proposed regulation.
Conservative
President and Chief Executive Officer, Canadian Vehicle Manufacturers' Association
That's correct.
Conservative
Jacob Mantle Conservative York—Durham, ON
If the government proceeds, my understanding is from comments the Prime Minister made when he said that the government will be “tightening by twofold” the emissions standard. Is that roughly your understanding of that new approach?
President and Chief Executive Officer, Canadian Vehicle Manufacturers' Association
Yes. The target that was announced by the Prime Minister was to get to 75% EV sales by 2035. Depending on how you translate it to the tailpipe standards, that could be a doubling or more in terms of stringency.
Conservative
Jacob Mantle Conservative York—Durham, ON
Yes, and I believe 90% by 2040 was the second target.
What are the options for manufacturers to meet the new standards? There's no mandate to sell EVs, but we have a new standard. What's a manufacturer to do?
President and Chief Executive Officer, Canadian Vehicle Manufacturers' Association
A manufacturer can continue to innovate and find ways to lightweight vehicles and make gas engines more efficient, but there is a limit. There is an engineering and a technical limit to what can be done. Once you've reached the maximum of those efficiencies, then you're left with really only two options, which is exactly what happened under the EV mandate.
You either have to start restricting the sale of gas-powered vehicles here in Canada, or you have to buy compliance credits from manufacturers who have a surplus. Those are the two options, and they are both very damaging economically to the companies that build here and employ Canadians.
Conservative
Jacob Mantle Conservative York—Durham, ON
It seems to me that the emissions standard is going to result in the same issue that existed with the sales mandate. Is that accurate?
President and Chief Executive Officer, Canadian Vehicle Manufacturers' Association
That is a very real risk if this is not done correctly.
Conservative
Jacob Mantle Conservative York—Durham, ON
Is the emissions standard then not simply a backdoor sales mandate?
President and Chief Executive Officer, Canadian Vehicle Manufacturers' Association
If they design it without real input from auto manufacturers, if they do not look at the data on what's achievable and they make this stringent to levels that no manufacturer can achieve, then, yes, the tailpipe regulations will simply be an EV mandate by another name.
Conservative
Jacob Mantle Conservative York—Durham, ON
That's right. That was my impression. I mean, if you tighten the emissions standards so much, the only vehicles that will qualify at that point functionally are going to be your plug-in or your battery electric zero-emission vehicles.
President and Chief Executive Officer, Canadian Vehicle Manufacturers' Association
That's correct.
Conservative
Jacob Mantle Conservative York—Durham, ON
I'm trying to understand what they really did here, but it seems that maybe it's just the same thing: a new wolf in different clothing.
President and Chief Executive Officer, Canadian Vehicle Manufacturers' Association
Yes, that is a very possible outcome. We've been urging the government to work with industry to not repeat the mistakes of the past.
We can provide technical data on what is achievable and what is feasible, but that data during the last round, when the EVAS was developed, was frankly ignored. Hence, we ended up with a regulation that was clearly unachievable from the day that the ink dried.
I would like to avoid that again. That was damaging and costly, and I'm concerned that we're going down the same path.
Conservative
Jacob Mantle Conservative York—Durham, ON
Thank you for that.
I have one last question. There was a recent review by RBC on the number of public dollars that have been pumped into EV supply chains. According to the Parliamentary Budget Officer, $46 billion was pledged between 2020 and 2024, and then RBC says it's $53 billion in government funding.
I'm trying to understand. The government says that this will be a return on investment, but my math says that's less than one dollar of private investment for every dollar of government investment. Am I understanding the state of play?
President and Chief Executive Officer, Canadian Vehicle Manufacturers' Association
This is why we need markets and the consumer to be at the centre of government policy here. You can encourage manufacturers to invest in this technology, but we have to make sure there's a market for it.
Unfortunately, we went down a road where the mandated technologies were being forced on Canadian consumers. The demand wasn't there, and this is the result. I mean, every manufacturer has written off tens of billions of dollars in investment into electrification, because the market simply wasn't where people thought it would be.
Liberal
