The roadmap: From here to where?

How front and centre is the auto industry in each of the three mainstream party platforms, and what do they propose?

As I write this column, we are two weeks away from a federal election, which some are viewing as an opportunistic move by the Prime Minister to lock down a majority government while the Liberal party is riding high in the polls for its handling of the pandemic and capitalizing on the relative obscurity of federal Conservative leader, Erin O’Toole.

At this point in the campaign, things haven’t quite worked out the way the PM and the Liberal campaign team were hoping for. Once again, the polls appear to have the views and perspectives of voters very wrong when it comes to voting intentions.

The Liberal lead in the polls, which in some cases had been in double-digits over the Conservatives, has all but evaporated—if it was ever really there, with both parties now in a statistical dead-heat.

The crisis in Afghanistan, campaign stop protests, and an opponent who came out of the gate with a platform “plan” and disciplined messaging that seems to resonate with at least some Canadians, may leave Canada in exactly the same spot as it was before the election with a minority government. The only thing that may be different is which party will be leading the minority.

As all major parties have released their platforms, it is useful to see how much direct and ancillary attention is placed on the automotive industry, given its traditional role as one of the key economic drivers of the Canadian economy, but also a sector that is in the midst of significant disruption.

While some of this disruption can be attributable to COVID-19 (i.e. the microchip shortage, supply chain disruptions, etc.), much of it would be occurring regardless of whether or not we were in the midst of a pandemic.

However, there are incentives announced to support the uptake of ZEVs through the re-funding of the federal iZEV incentive program to the tune of $1.5 billion.

I have spent a fair amount of time in other columns highlighting just how much change the industry is going through, and will be going through, in a relatively short period of time. I would suggest that this disruption warrants a larger Canadian auto sector strategy to ensure, as best we are able, that Canada retains the same (or larger) portion of the “new” automotive industry as it did of the “old” automotive industry.

The Conservative platform entitled “Canada’s Recovery Plan” is a comprehensive 160-page document. Regarding the automotive sector specifically, some of the more visible planks of the platform relate to implementing a zero-emissions vehicle mandate, similar to that of British Columbia, whereby 30 per cent of the light-duty vehicles sold by 2030 would have to be zero-emissions.

While there is a ZEV mandate “stick,” there are no carrots with respect to maintaining an incentive program to make ZEVs more affordable to consumers, nor any plan to increase infrastructure other than by modifying laws requiring buildings to have EV chargers available.

The inference seems to be that consumers could use the proceeds of their “Personal Low Carbon Savings Account” to be able to better afford an EV.

More broadly, the Conservatives have promised $1 billion for EV manufacturing and battery production in Canada, and another $1 billion for hydrogen technology including vehicles. The plan also makes mention of support for EV battery repurposing and recovery—which is probably required on a national level.

Regrettably, the Conservatives have repeated the notion from their Climate Plan in the Recovery Plan, to “study” the taxation of luxury vehicles with the caveat that zero-emission luxury vehicles would be excluded, should the “study” find its way to reality.

This only makes sense, given that the lack of a luxury tax on a luxury EV may just be the thing that tips the consumer towards purchasing an EV versus an ICE luxury vehicle.

The platform also has some useful and probably needed provisions, with respect to apprenticeship job creation, and $250 million over two years for a Canada Job Training Fund for displaced workers. It also contains that typical conservative initiative of decreasing red tape and creating the right environment for innovation and capital investment in Canada.

While perhaps not obvious for some, the platform also suggests that the Conservatives will take a much more stringent approach regarding the use, monitoring, retention, and disclosure of personal data in a manner that is more stringent than C-11—the Liberal bill that died on the order paper.

For connected and automated vehicles, this is an issue for all of us as we attempt to provide consumers with the functionality and safety systems that they’ve now come to expect from a modern vehicle that is also connected to the internet.

The Liberal platform “Forward for Everyone” is just over 90 pages in length. While there are a lot of commitments packed into the document, at times it is difficult to discern what has already been announced vis-à-vis what is actually new.

With regard to the automotive industry there is a significant commitment to zero-emission vehicles, accompanied by a stick in the form of a ZEV mandate that would require 50 per cent of all vehicles to be ZEVs by 2030 and 100 per cent by 2035.

However, there are incentives announced to support the uptake of ZEVs through the re-funding of the federal iZEV incentive program to the tune of $1.5 billion.

This would support 500,000 Canadians with the purchase of their ZEV. Additionally, there is $700 million committed to the creation of 50,000 new EV and hydrogen stations for ease of refuelling, and a further $100 million committed to retrofit older buildings to accommodate EV chargers.

The Liberals have also committed to electrifying 100 per cent of the government fleet by 2030.

Importantly, they do seem to recognize that there will be gaps in training and up-skilling to transition to the battery economy (as they call it), and they are prepared to fund this, as well as develop an end-to-end sustainable supply chain in Canada.

Importantly the Liberals seem to appreciate that Canada is behind the eight ball with respect to battery development and is committing to doubling the mineral exploration tax credit, as well as providing a 30 per cent investment tax credit for “clean, low carbon technologies.”

Further, they are committing to establishing a Canada-U.S. battery alliance to develop a world scale battery supply chain in North America.

Canada has a world-leading chemicals management program, however one of the challenges with being a leader in a small country is that it is difficult, if not impossible for Canada to drive the bus in areas of banning certain chemicals and components etc.

The Liberals remain committed to amending the Canadian Environmental Protection Act with the view to enshrining the “right to a healthy environment.” While this sounds innocuous enough, it may prove problematic for a number of industries—including the auto industry.

The platform also includes a re-commitment to introduce a luxury tax, as was previously outlined in the last budget to tax luxury vehicles over $100,000 in addition to boats and airplanes. This is viewed as an opportunistic tax, and also one that is inconsistent with other policy objectives unless they exempt luxury ZEVs from the tax.

The New Democrat’s “Ready for Better” platform is, perhaps surprisingly, the only platform that speaks to the development of a national automotive strategy based on input from industry, provincial, and municipal leaders at an auto summit.

The platform also calls for the introduction of a vague luxury tax, while also supporting the transition to zero-emission vehicles through the removal of the federal sales tax, and an increase of the incentive to $15,000.

The Liberals remain committed to amending the Canadian Environmental Protection Act with the view to enshrining the “right to a healthy environment.”

However, this would be relevant for exactly one vehicle currently as the NDP would apparently tie any incentive to “vehicles built in Canada,” which sounds perhaps very patriotic but is actually offside of Canada’s national treatment obligations under various trade agreements, as well as the WTO.

While the industry may not be front and centre in any of the three mainstream party platforms, there is recognition in all of them that the industry is changing and that there is a role for whoever wins the election to work with the industry to facilitate that change to ensure that Canada’s auto sector can continue to thrive into the future—whatever that future may look like.

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