At first glance, Prime Minister Mark Carney’s new auto industry strategy looks like billions of dollars in support for Ontario’s beleaguered vehicle manufacturers. Unfortunately, Carney’s EV-focused approach will do little or nothing to solve the industry’s problems.

It’s difficult to imagine a plan more untethered from the economic realities of the real-world auto industry. To summarize, the Carney plan relies on electric vehicles (EVs) that Ontario plants don’t produce, a sudden and dramatic new appetite for buying EVs and an imagined export market that doesn’t exist. To top it off, the federal government will provide $2.3 billion in EV rebates that will encourage Canadians to buy cars made elsewhere, although the new Chinese imports are excluded.

Canada’s Ontario-centric auto manufacturing industry is a marginal player in EVs. The only ones it produces are the Dodge Charger muscle car and the Chrysler Pacifica minivan. Both are niche products priced above the $50,000 cut-off for Carney’s new rebate program. Carney is spending billions of dollars on rebates that are irrelevant to the Canadian industry.

Carney wants to make Canada a global leader in EV production, but to accomplish that there would have to be a market for the EVs. It won’t be Canada.

Consumer demand here is too small to sustain EV-only plants. Canadians buy about 1.8 million vehicles a year and EV sales currently make up just 10 per cent of that. To be cost effective, an auto plant needs to produce about 200,000 units of one model a year, but Canada’s market alone isn’t big enough to absorb that volume.

Carney would like Canadians to think that new EV manufacturers will set up shop in Canada and ship their cars elsewhere. Why would they? The U.S. is the only cost-effective export market for Canadian auto makers. But even that’s now in question because of hostile American trade policies.

Carney would have people believe that Ontario’s auto industry has a future without American access. It doesn’t. That ability to sell to Americans is why we have an industry in the first place.

As Canadian Vehicle Manufacturers Association CEO Brian Kingston said in an interview, the U.S. market is “fundamental to any auto strategy but it was not addressed in this (new strategy) announcement.”

Carney’s plan also ignores a key fact. While he wants to step on the EV accelerator, the auto industry itself is hitting the brakes. Honda has delayed building a $15-billion battery and EV assembly plant in Alliston, Ont. Stellantis has sharply reduced its EV plans. GM has stopped production of its electric delivery van in Ingersoll, Ont. Ford dropped several electric vehicle models, took an US$19.5-billion write-down and switched its focus to gas cars and hybrids. Ontario manufacturing stalwart Toyota is concentrating on hybrids, not EVs.

Despite all its flaws, Carney’s plan has received a mostly positive reception from the auto industry, largely because it includes the one thing they absolutely had to have. Carney ended the previous Liberal government’s wildly unachievable goal of 100 per cent of new passenger vehicle sales being EVs by 2035.

That would have killed the auto industry in Ontario, making almost all of what it produces unsellable in Canada in just nine years. The Carney version relaxes the EV target a bit, replacing EV sales numbers with tailpipe emissions targets, but the end result will be similar.

The future of Ontario’s auto industry rests almost entirely on the whims of U.S. President Donald Trump and Carney. Trump is dead set against car imports from Canada and EVs from anywhere. Carney imagines an industry that doesn’t exist now and almost certainly never will.

This ought to be alarming for Ontario and Premier Doug Ford. The auto industry is the heart of the province’s manufacturing sector, supporting almost 100,000 direct jobs and vehicles are Ontario’s top export.

Ford has described the situation of Ontario’s auto industry as a “massive inferno,” but as Carney has poured gas on the fire, the premier has been remarkably quiet. He didn’t appear at Carney’s new EV-strategy announcement and offered muted support at a press conference.

Notably, Ford has declined to match Carney’s federal EV incentives with provincial subsidies, and remains focused on the jobs already lost in the industry and the necessity of landing a favourable trade deal with the U.S. No doubt Ford understands that a futuristic EV plan isn’t what the Ontario auto industry needs now.

The only person who really needs an EV plan is Carney. The political calculus is simple. By pushing rapid EV adoption, the prime minister goes some way to restore his tarnished green credentials while making himself sound like a man of the future. Too bad his plan ignores the auto industry of the present.

National Post
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