Transport Committee on May 2nd, 2022

[Vance Badawey, Liberal, Niagara Centre, ON]

Well, I wouldn't go that far. I actually passed a few on the way into Ottawa yesterday, and I was seeing them all filled back up, but when it comes to the other vehicles, it's not the case.

I also understand, Mr. Kingston, that fewer than a quarter of dealerships nationwide have three or more ZEVs in stock, and that outside of Quebec, B.C. and Ontario, only 18% of dealerships have any ZEVs available at all. Only 4% have five or more. Are those stats accurate, more or less?

[Brian Kingston]

I would have to see them, but they sound to be consistent. Again, just to note what Mr. Paterson said, Quebec and B.C. have significant provincial incentives. When you have a strong incentive in the market, you will see greater demand for ZEVs and therefore bigger inventories at dealerships. It has nothing to do with a sales mandate.

[Vance Badawey, Liberal, Niagara Centre, ON]

If supply is so limited, does that not suggest the need for stronger and more urgent regulatory action, such as ZEV mandates, as I mentioned earlier in my first question?

[Brian Kingston]

No, it does not, because mandating ZEV sales does not address a global semiconductor shortage. That will make no difference whatsoever.

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you, Mr. Kingston.

How much time do I have left?

[The Chair, Liberal, Peter Schiefke]

That's it, Mr. Badawey. Thank you very much.

[Vance Badawey, Liberal, Niagara Centre, ON]

Oh, that's it?

[The Chair, Liberal, Peter Schiefke]

That's it.

Thank you, Mr. Kingston.

Next we have Ms. Lantsman. The floor is yours. You have five minutes.

[Melissa Lantsman, Conservative, Thornhill, ON]

Thank you.

I'm going to stay on this topic because I appreciate the conversation we're having, and I think it will inform the study on the supply chain crunch.

Mr. Kingston, you agree that we are infusing the electric vehicle market with incentives at the manufacturer's level, at the consumer level and at the infrastructure level. Can you talk a little bit about what the companies that you represent are actually doing to push adoption and sales on their own? That's not to mention that in most provinces, particularly the one that we happen to be sitting in, incentivizes or frankly pumps money into electricity to the tune of $7 billion. At every point there is tax money infused into this.

Can you talk a little bit about what you think the industry should do, without government help, to get people to adopt this?

[Brian Kingston]

The single most important thing that industry and my members in particular are doing right now is bringing larger vehicles to market that are electrified. Canadians and North Americans love SUVs and pickup trucks. You're seeing Ford, General Motors and Stellantis investing over $100 billion U.S. into electrification, with a huge amount of that dedicated to bringing vehicles like the Silverado, the Ford F-150 and the Dodge Ram into the market in electrified versions.

In Canada, 80% of sales are of SUVs and pickup trucks, so that to me is a game-changer. A whole new segment of the Canadian consumer population wants to have a pickup truck and currently can't buy an electrified version right now. I think that is extremely important. I'd also note that some manufacturers are also building out their own charging infrastructure, General Motors in particular.

[Melissa Lantsman, Conservative, Thornhill, ON]

Mr. Kingston, can you talk about whether you've asked the government for any additional incentives for the manufacturers, the consumers or the infrastructure? Can you talk about what those are?

[Brian Kingston]

When it comes to consumer incentives, we've asked for a larger federal incentive. Currently $5,000 is provided, but the challenge with the larger vehicles that are coming to market, like pickup trucks, is that they have a large battery inside them. What that means is that the cost is higher right now. We expect battery technology to advance and the price to come down, but giving a consumer a pickup truck with the range that they demand—300, 400 or 500 kilometres—means a bigger battery and a bigger expense.

A $5,000 incentive, when you think that the median household income in this country is about $60,000, is not going to be enough to help all Canadian households make the switch to electric. We've asked for a much bigger consumer incentive if the government wishes to achieve its sales targets.

[Melissa Lantsman, Conservative, Thornhill, ON]

Is there anything on the infrastructure incentive? I shouldn't say “incentive”, but the cash that goes toward building additional infrastructure.

You mentioned in your comments that we are not even close. That's how you put it.

[Brian Kingston]

We've asked for a couple of things. First of all, we'd like the federal government to have a stronger coordinating role with provinces and utilities to figure out where we need infrastructure and how to prioritize the spend. We saw the $50,000 commitment, but we don't have a detailed plan. Other jurisdictions that are doing this put out annual reports with detail right down to a postal code level of what infrastructure is going to be required, what the energy generation demands will be and what grid capacity is needed. We're not doing that in Canada. That's the first ask.

Second, we need a more ambitious target. As I said previously, 50,000 chargers are not going to cut it. They're going to have to invest more and build more charging infrastructure.

I want to make one final note. We do not expect that this is all going to be on the public sector. Of course, as more ZEVs become available on the road, the overall market will grow and there will be a strong private sector imperative to build charging infrastructure. However, right now, of the total vehicle market and the total fleet on the road, only 0.2% of those vehicles are electrified. That's why you need the government to play a role to make this investment happen now and, as Dave Adams said, to overbuild now. Eventually, as the ZEV fleet increases, you'll see a lot of private sector capital flowing into that space.

[Melissa Lantsman, Conservative, Thornhill, ON]

I hear where you are on the sales mandate and the fact that it's not something that necessarily works. Can you speak to any of the conversations that you've already had with the government on my colleague Mr. Badawey's point earlier about getting these things into dealerships and into lots, and having the supply for those who want to adopt EVs ready so that they are able to purchase them?

[The Chair, Liberal, Peter Schiefke]

Give a 15-second response, please.

[Brian Kingston]

Automakers are moving extremely quickly right now with the investments that I've outlined to increase the number of EVs coming into the market. That is happening immediately. We have to resolve these supply chain challenges, and the semiconductor issue in particular. Regulation is not going to do it. We have to resolve those issues and support automakers as they go on this journey to electrification.

[Melissa Lantsman, Conservative, Thornhill, ON]

Thank you.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Kingston. Thank you very much, Ms. Lantsman.

Next we have Mr. Angelo Iacono.

Mr. Iacono, you have the floor for five minutes.

[Angelo Iacono, Liberal, Alfred-Pellan, QC]

Thank you, Mr. Chair.

I thank the witnesses for being with us this morning.

My first question is for Mr. Kingston.

Some automakers have argued that mandating autonomous zero-emission vehicle sales will put Canada out of alignment with regulations in the United States, among others, and that could have consequences for our country in terms of investment, jobs and the supply chain for that type of vehicle.

However, we know that most automakers have already indicated that they intend to shift their entire production to zero-emission vehicles in the coming years. The federal government has partnered with the industry to make significant investments in batteries and electric vehicle manufacturing in this country.

Is there no zero-emission vehicle, or ZEV, standard to support this green transition? Can you give us more details on that?

[Brian Kingston]

You're absolutely right. The government has been very aggressive in working to attract more investment into Canada. In fact, I'm speaking to you today from Windsor, where in 20 minutes we're about to hear another exciting EV investment. A lot of work has been done with the government at the federal and provincial levels to help build an EV supply chain here in Canada.

When it comes to regulation, that's not going to change the journey that we're on. Automakers, as we've outlined—at least from my CVMA perspective—are all in on electrification. We have very aggressive EV production targets—eight million units of production by 2025 by my members alone—so we need to help the industry in this transition. Regulating sales and taking us out of alignment with the U.S. won't do anything. That doesn't help that transition.

What we have to do is focus on the infrastructure; build out that EV supply chain, including support for critical minerals; and help make this shift possible for every Canadian. It has to be affordable for every Canadian, and we're just simply not there yet.

[Angelo Iacono, Liberal, Alfred-Pellan, QC]

Thank you, Mr. Kingston.

Mr. Paterson, what lessons have you learned over the past three years with respect to the supply chain in your industry?

I'm thinking of such things as weather emergencies on the West Coast and disruptions at ports, if that was the case.

[David Paterson]

I would say that over time we have constantly faced disruptions in the supply chain. Famously, the automotive supply chain is a just-in-time supply chain, and there's no inventory on the floor of our vehicle plants. We count on everything arriving just in time.

That has been challenged because of climate change effects, as we saw in British Columbia, and impacts on ports. We saw the border challenged at the Windsor bridge. Over time we've had these challenges quite frequently, and we've built resilience into our people management of supply chains. The answer from the automotive perspective, in my view, is just to keep doubling down on the planning to get ahead so that we're ready to respond to things as quickly as we can.

With the Ambassador Bridge, our companies lost hundreds of millions of dollars because of that pinch point being too narrow. We need to double it up and fix that infrastructure, and there's work being done to do that.

The blessing that we have in North America is that the auto sector, our second-biggest industry in Canada, is integrated with North America. We can sell to a market 10 times the size of ours. That integration is critical, so alignment and doing it together with the United States is what gives us that enormous economic advantage for all of Canada.

[Angelo Iacono, Liberal, Alfred-Pellan, QC]

Thank you, Mr. Paterson.

Mr. Adams and Mr. Kingston, witnesses often point out to us that supply chain disruptions damage Canada's reputation as a reliable trading partner.

As key players, have you felt that within your industry? Do you have direct evidence of such damage?

[The Chair, Liberal, Peter Schiefke]

Excuse me, Mr. Iacono.

Colleagues, I see that the vote has been called. If there are no objections, we can continue questions for the next five minutes, or perhaps 10 minutes. Are there any objections?

I see none. Please continue, Mr. Iacono.