Economic storm clouds are circling above Canada’s border with the United States, threatening to move northwards and spread across the country.
Ontario’s fledgling electric vehicle manufacturing industry is one area of the economy watching fearfully for what comes next. With an election campaign underway in the province, the best way to handle EV jobs is increasingly on the ballot.
On Thursday, Progressive Conservative Party Leader Doug Ford said he would continue to spend government money on EV and battery plants if re-elected, even if subsidies from the U.S. that Ontario has only promised to match disappear.
“A re-elected PC government will honour our commitment to invest in the sector,” Ford said on Thursday. “No matter what decision the U.S. makes about the Inflation Reduction Act, we will maintain our financial contributions.”
He added, “Even if President Trump tears up America’s commitment to the auto industry, we will not.”
Donald Trump has been threatening 25 per cent tariffs on all Canadian imports to the United States, with the U.S. president also signalling he will tank his country’s electric vehicle incentives and scrap adoption targets.
Trump has said Americans “don’t need” vehicles made in Ontario and laid out an explicit strategy to force auto manufacturers to move their operations within the United States.
Trump’s plans pose a potential threat to a strategy the Progressive Conservatives in Ontario and Liberals in Ottawa spent years building.
Ford and Prime Minister Justin Trudeau have worked together over the past few years to promise billions to auto manufacturing operations based mainly in southern Ontario. The pair agreed to pay one-third of production incentives to Volkswagen for a battery plant in St. Thomas, Ont., as well as a similar operation from Stellentis and LG Energy Solution in Windsor.
The two governments ponied up the money in order to compete with former U.S. president Joe Biden’s Inflation Reduction Act, which included a tax credit for clean vehicle purchases. Trump has frozen that credit — pausing the flow of funds for its tax credits.
While Ford stood firmly behind his previous investments, NDP Leader Marit Stiles said she would protect the auto industry while raising questions about the agreements signed by Ford with Stellantis and Volkswagen.
“I believe in the EV sector, I think this is important for the future of our own economy,” Stiles said at a campaign event in Toronto.
She said she was not convinced the Stellantis and Volkswagen deals are good for Ontarians.
“Doug Ford does not make good deals for Ontario generally, and I’m going to be looking very carefully at the details of the deals that he’s struck with those folks,” she said.
Green Party Leader Mike Schreiner has previously indicated his strong support for growing electric vehicles, including through subsidies for their purchase.
The federal Parliamentary Budget Officer has calculated Ontario has committed $6.8 billion in construction support across all EV supply chain projects. It has promised $14.3 billion to match U.S. production subsidies.
But is Ford’s promise to honour those subsidies a case of throwing good money after bad?
One expert said the election of Trump brings a fundamental shift in how the auto sector will operate and believes Ontario’s next premier, and Canada’s next prime minister, may find the country moved too soon on electric vehicles.
“They’re getting ahead of themselves, they’re getting ahead of the market,” Ian Lee, a professor at Carleton University, told Global News.
“Whether we hate it or not, hate Donald Trump or not, he is the president and he is obviously cancelling those projects that were promoting the green revolution and the rapid acceleration of EV adoption. This isn’t a theory, this isn’t an opinion, he’s doing it, we know that.
“This is going to change the direction of the market. The idea that we in Ontario or Canada can ignore those changes, I think are wrong.”
Ontario Liberal Leader Bonnie Crombie indicated she shared the same fears the previous Ford government over-invested in the EV sector.
“I’m very concerned that the premier has put all our eggs in the EV basket, has not tried to diversify our economy, insulate us in any way, and brought different kinds of investment into Ontario and create jobs,” Crombie said on Thursday.
The Liberal leader said she would bring back EV consumer rebates that Ford scrapped in 2018.
While Ford and Stiles vow to protect Ontario auto worker jobs, however, Lee said the change in the market from Trump could be an existential threat to the industry in Canada.
Volkswagen, for example, hasn’t built its facility in St. Thomas yet, a building Ford said would be the fourth largest in the world. Lee said a potential cratering in demand for electric vehicle batteries could shutter the plants entirely — whether or not Ontario ponies up with subsidies.
“What Trump is doing is going to kibosh EVs, well, if you’ve kiboshed or radically slowed the adoption rate, then you just don’t need all those batteries,” he said.
“The reality is if sales tank — and I mean EV sales tank across North America in the next six, 12, 18 months — I don’t see how anybody can save those plants because if there’s no demand for the damn batteries, why are you going to keep making batteries if no one’s buying batteries?”
— with files from The Canadian Press