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Canada Powers Up EV Push as Auto Giants Fuel Battery Boom
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Amid heightening climate concerns, countries worldwide are fast transitioning to electric vehicles (EVs) in the pursuit of a greener and sustainable future. To this end, Canada—home to abundant natural resources and committed to reducing greenhouse gas emissions— is making significant strides in the EV battery manufacturing domain. Also, as auto giants like General Motors (GM - Free Report) , Ford (F - Free Report) , Volkswagen (VWAGY - Free Report) and Stellantis (STLA - Free Report) are fast changing their gears to electric and planning to introduce a lineup of green cars in the coming years, they are actively ensuring that the future models don’t get held up amid a shortfall of batteries.
In another indication of a new wave of investment related to EV battery production underway in Canada, U.S. legacy automaker Ford (F - Free Report) , along with its South-Korean partners EcoProBM and SK On, recently announced plans to invest C$1.2 billion to build an EV battery plant in Quebec.
Canada's Rise as an EV Battery Powerhouse
Most of the battery cells for green vehicles are produced in Asia (primarily in China, Japan and South Korea). China leads battery technology and automakers are heavily reliant on the country for EV batteries. And if there’s one thing that COVID-19 has taught the auto industry is that it should not be overdependent on one region. Automakers are working toward reducing foreign reliance and localizing battery production. In a bid to take advantage of the growing EV popularity, Canada is fast emerging as a battery supply chain hub for EVs, thereby challenging China’s dependence.
Canada boasts rich reserves of essential raw materials for EV battery production, such as lithium, nickel, cobalt and graphite. These resources, coupled with a strong mining sector and advanced extraction techniques, form a strong foundation for Canada’s battery manufacturing ambitions. To attract investment and bolster the EV industry, Canada has introduced enticing measures such as tax incentives and clean energy subsidies.
According to Sarah Houde from the economic development agency Propulsion Quebec, Canada is one of the few countries with the remarkable advantage of possessing all the essential minerals required for battery production. Moreover, Canada's geographic proximity to major markets like the United States bolsters its competitiveness by streamlining supply chain logistics.
The region's surplus of clean and affordable hydroelectricity amplifies its attractiveness for battery manufacturing. Driving towards e-mobility, Ottawa's plan includes substantial incentives, totaling around C$80 billion, to propel investments in non-emitting electricity generation, green technologies and mining over the next decade. The drive to establish a circular supply chain by recycling electric batteries also underscores Canada's commitment to sustainability and resource efficiency.
Impressively, Canada has surged from the fifth to the second place worldwide in battery supply, a feat highlighted by Prime Minister Justin Trudeau. BloombergNEF's latest rankings placed Canada just behind China, a testament to the nation's significant progress. The Canada battery market is expected to witness a CAGR of more than 18% over 2022-2028 timeframe, according to MarketResearch.com.
As the world anticipates a substantial surge in demand for minerals critical to battery production, Canada's strategic vision, resource wealth and sustainable energy foundation position it as a prominent battery hub on the global stage.
A Glimpse Into Major Investments and Collaborations
In March 2022, Stellantis and LG Energy Solution announced a C$5 billion investment for the establishment of lithium-ion battery production plant in Ontario, Canada. However, tensions arose a few months later when the U.S. enacted the Inflation Reduction Act (IRA), a comprehensive package of incentives promoting clean technology for corporations. Construction of the plant was halted as the companies demanded Canada to provide similar support and incentives that were available in the United States under the newly enacted IRA.
Fast-forward to July 2023, Stellantis and LG Energy announced their decision to recommence construction of the EV battery plant in Ontario after the federal government and the province of Ontario increased subsidies for the project. With this renewed momentum, the battery plant is now scheduled to commence production in 2024. The project is set to generate around 2,500 new jobs and is poised to achieve an annual production capacity exceeding 45-gigawatt hours.
In May 2022, General Motors and POSCO Chemical announced plans to build a plant in Becancour, Canada, for the production of high-nickel cathode active materials (CAM) for EV batteries. Per the contract, the plant will produce 30,000 tons of CAM per year to be used by 220,000 EVs. The plant is expected to become operational by 2025.
In May 2023, the Ministry of Industry in Canada announced that both the federal government and the Quebec province would contribute approximately C$150 million each for the GM-POSCO Chemical joint venture, which is anticipated to generate approximately 200 employment opportunities. The companies also stated that they would expand the production capacity at the chemical battery materials facility.The increased production capacity will support the manufacturing of approximately 360,000 Chevrolet, Cadillac, GMC, Buick, and BrightDrop vehicles annually in the 2025-2030 timeframe in North America.
In April 2023, Canada and Germany-based auto biggie Volkswagen announced around more than C$20 billion investment for a battery gigafactory in Ontario. This represents the largest singular investment ever made in Canada’s EV supply chain network. Per the agreement, Volkswagen will receive up to C$13 billion ($9.7 billion) in subsidies and a C$700 million grant from the Canadian government to build its battery plant. Volkswagen will invest around C$7 billion to build the plant. With a maximum capacity of 90-gigawatt hours, the new battery plant will produce batteries for over a million cars annually. This will be VWAGY’s biggest battery facility and is anticipated to create up to 3,000 jobs. The plant's scheduled production start in 2027, combined with Volkswagen’s ambitious EV targets, could lead to significant growth for the company in the coming years.
Last Thursday, Ford in association with SK On, EcoProBM announced plans to construct a C$1.2 billion plant in Becancour for producing EV battery materials. This move aims to establish Becancour as a key hub in the EV supply chain. The factory will manufacture 45,000 tonnes of CAM annually for Ford's EVs, particularly high-quality nickel cobalt manganese for improved performance and range. Canada’s federal government and Quebec will each provide C$322 million as conditional and partially forgivable loans. Operational by the first half of 2026, the facility is set to create over 345 jobs. This endeavor represents Ford's first foray into investment in Quebec.
The abovementioned investments reaffirm Canada's role as the preferred green strategic partner for global automotive leaders. Vertical integration is becoming crucial for automakers with each passing day to support the production of their zero-emissions vehicles. Canada’s rich resources, research advancements and collaborative approach position it as a key player in the EV battery industry. With the Canadian government committed to fostering a thriving EV battery industry as reflected in its supportive policies and incentives, investments in the country will only gain traction as automakers prepare to meet the soaring demand for environmental-friendly vehicles.
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Canada Powers Up EV Push as Auto Giants Fuel Battery Boom
Amid heightening climate concerns, countries worldwide are fast transitioning to electric vehicles (EVs) in the pursuit of a greener and sustainable future. To this end, Canada—home to abundant natural resources and committed to reducing greenhouse gas emissions— is making significant strides in the EV battery manufacturing domain. Also, as auto giants like General Motors (GM - Free Report) , Ford (F - Free Report) , Volkswagen (VWAGY - Free Report) and Stellantis (STLA - Free Report) are fast changing their gears to electric and planning to introduce a lineup of green cars in the coming years, they are actively ensuring that the future models don’t get held up amid a shortfall of batteries.
In another indication of a new wave of investment related to EV battery production underway in Canada, U.S. legacy automaker Ford (F - Free Report) , along with its South-Korean partners EcoProBM and SK On, recently announced plans to invest C$1.2 billion to build an EV battery plant in Quebec.
Canada's Rise as an EV Battery Powerhouse
Most of the battery cells for green vehicles are produced in Asia (primarily in China, Japan and South Korea). China leads battery technology and automakers are heavily reliant on the country for EV batteries. And if there’s one thing that COVID-19 has taught the auto industry is that it should not be overdependent on one region. Automakers are working toward reducing foreign reliance and localizing battery production. In a bid to take advantage of the growing EV popularity, Canada is fast emerging as a battery supply chain hub for EVs, thereby challenging China’s dependence.
Canada boasts rich reserves of essential raw materials for EV battery production, such as lithium, nickel, cobalt and graphite. These resources, coupled with a strong mining sector and advanced extraction techniques, form a strong foundation for Canada’s battery manufacturing ambitions. To attract investment and bolster the EV industry, Canada has introduced enticing measures such as tax incentives and clean energy subsidies.
According to Sarah Houde from the economic development agency Propulsion Quebec, Canada is one of the few countries with the remarkable advantage of possessing all the essential minerals required for battery production. Moreover, Canada's geographic proximity to major markets like the United States bolsters its competitiveness by streamlining supply chain logistics.
The region's surplus of clean and affordable hydroelectricity amplifies its attractiveness for battery manufacturing. Driving towards e-mobility, Ottawa's plan includes substantial incentives, totaling around C$80 billion, to propel investments in non-emitting electricity generation, green technologies and mining over the next decade. The drive to establish a circular supply chain by recycling electric batteries also underscores Canada's commitment to sustainability and resource efficiency.
Impressively, Canada has surged from the fifth to the second place worldwide in battery supply, a feat highlighted by Prime Minister Justin Trudeau. BloombergNEF's latest rankings placed Canada just behind China, a testament to the nation's significant progress. The Canada battery market is expected to witness a CAGR of more than 18% over 2022-2028 timeframe, according to MarketResearch.com.
As the world anticipates a substantial surge in demand for minerals critical to battery production, Canada's strategic vision, resource wealth and sustainable energy foundation position it as a prominent battery hub on the global stage.
A Glimpse Into Major Investments and Collaborations
In March 2022, Stellantis and LG Energy Solution announced a C$5 billion investment for the establishment of lithium-ion battery production plant in Ontario, Canada. However, tensions arose a few months later when the U.S. enacted the Inflation Reduction Act (IRA), a comprehensive package of incentives promoting clean technology for corporations. Construction of the plant was halted as the companies demanded Canada to provide similar support and incentives that were available in the United States under the newly enacted IRA.
Fast-forward to July 2023, Stellantis and LG Energy announced their decision to recommence construction of the EV battery plant in Ontario after the federal government and the province of Ontario increased subsidies for the project. With this renewed momentum, the battery plant is now scheduled to commence production in 2024. The project is set to generate around 2,500 new jobs and is poised to achieve an annual production capacity exceeding 45-gigawatt hours.
In May 2022, General Motors and POSCO Chemical announced plans to build a plant in Becancour, Canada, for the production of high-nickel cathode active materials (CAM) for EV batteries. Per the contract, the plant will produce 30,000 tons of CAM per year to be used by 220,000 EVs. The plant is expected to become operational by 2025.
In May 2023, the Ministry of Industry in Canada announced that both the federal government and the Quebec province would contribute approximately C$150 million each for the GM-POSCO Chemical joint venture, which is anticipated to generate approximately 200 employment opportunities. The companies also stated that they would expand the production capacity at the chemical battery materials facility.The increased production capacity will support the manufacturing of approximately 360,000 Chevrolet, Cadillac, GMC, Buick, and BrightDrop vehicles annually in the 2025-2030 timeframe in North America.
In April 2023, Canada and Germany-based auto biggie Volkswagen announced around more than C$20 billion investment for a battery gigafactory in Ontario. This represents the largest singular investment ever made in Canada’s EV supply chain network. Per the agreement, Volkswagen will receive up to C$13 billion ($9.7 billion) in subsidies and a C$700 million grant from the Canadian government to build its battery plant. Volkswagen will invest around C$7 billion to build the plant. With a maximum capacity of 90-gigawatt hours, the new battery plant will produce batteries for over a million cars annually. This will be VWAGY’s biggest battery facility and is anticipated to create up to 3,000 jobs. The plant's scheduled production start in 2027, combined with Volkswagen’s ambitious EV targets, could lead to significant growth for the company in the coming years.
Last Thursday, Ford in association with SK On, EcoProBM announced plans to construct a C$1.2 billion plant in Becancour for producing EV battery materials. This move aims to establish Becancour as a key hub in the EV supply chain. The factory will manufacture 45,000 tonnes of CAM annually for Ford's EVs, particularly high-quality nickel cobalt manganese for improved performance and range. Canada’s federal government and Quebec will each provide C$322 million as conditional and partially forgivable loans. Operational by the first half of 2026, the facility is set to create over 345 jobs. This endeavor represents Ford's first foray into investment in Quebec.
F currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Last Words
The abovementioned investments reaffirm Canada's role as the preferred green strategic partner for global automotive leaders. Vertical integration is becoming crucial for automakers with each passing day to support the production of their zero-emissions vehicles. Canada’s rich resources, research advancements and collaborative approach position it as a key player in the EV battery industry. With the Canadian government committed to fostering a thriving EV battery industry as reflected in its supportive policies and incentives, investments in the country will only gain traction as automakers prepare to meet the soaring demand for environmental-friendly vehicles.