Schism appears between two sides as Ottawa consults on how to protect home-grown sector
The rise of electric vehicles helped bring environmentalists and the Canadian auto sector closer together. Now, the threat of Chinese-made electric vehicles is pushing them apart.
“Somebody has to be the voice for Canadian consumers who want and need affordable EVs,” said Joanna Kyriazis, director of Clean Energy Canada, a non-profit working to accelerate the energy transition. “And somebody has to be the voice for supporting the energy transition and making sure it has a smooth and fast path forward because, you know, climate change.”
Glut of EVs
Freeland has accused China of flouting international trade rules by deliberating creating an oversupply of EVs, although most industry insiders say that so far the imports are characterized by brands that are familiar to most Canadians, including primarily Tesla Inc. and Volvo Cars.
“It’s complicated,” Kyriazis said about putting tariffs on Chinese EVs.
“You can’t deny the huge role that China has played in driving down the costs of clean energy technologies,” she said. “Any discussion around completely boxing that global manufacturing hub out of our clean energy transition, it’s got to be thought through.”
Nate Wallace, program manager of clean transportation at Environmental Defence in Ottawa, sees tariffs as a deliberate play by auto manufacturers to delay introducing affordable EVs.
“It’s just so bald-faced what their strategy is,” he said. “They want to keep out China to make sure that the budget EV (market niche) never gets filled, so they can keep EVs to a marginal luxury market and then they can keep selling gas-guzzling vehicles, which make them more money. That’s their strategy and we need to make sure they don’t win.”
Both Wallace and Kyriazis said their organizations are not unilaterally opposed to tariffs, but want to be careful not to shield the domestic auto sector from competition.
That strikes a far different tone than the labour unions that represent auto workers, including Unifor. (Disclosure: the Financial Post is unionized under Unifor.)
Unifor national president Lana Payne was not available for an interview, but released a statement calling China “the most pressing threat” to the North American auto sector.
‘Dirty energy’
“China has taken a low-road approach to its green industrial development, fuelled by dirty energy, deplorable labour standards and overproduction for export markets,” Payne said.
In her statement, she said Unifor “welcomes any federal action to guard against unfair Chinese EV imports.”
Last week, Payne stood shoulder to shoulder with Freeland, who announced the 30-day consultation at a plant in Vaughn, Ont., where Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, also appeared.
“They’re not market-driven,” he said, arguing that state-owned vehicle manufacturers can show losses for years and keep prices artificially low.
Volpe said he met with Freeland and Trade Minister Mary Ng this past October to press the viewpoint, and then the following month he flew to Washington, D.C., to meet with White House officials.
The desire to make affordable EVs for Canada is an “unimpeachable” idea,” he said. “But the weakness in the argument is that you think China plays by the rules?”
He pointed out that in December 2018, China “arbitrarily” detained two Canadians, Michael Spavor and Michael Kovrig, days after Canada detained Meng Wanzhou, chief financial officer of Huawei Technologies Co. Ltd. while she was in Vancouver.
But Canada was following its obligations under an international extradition treaty with the U.S., where a judge had issued an arrest warrant on allegations Wanzhou violated U.S. economic sanctions against Iran.
“They dumped them into jails because they didn’t like us executing the rule of law,” Volpe said.
Like Freeland, he accused China of implementing a state-directed policy of producing more EVs than domestic demand levels can support. As a result, Canada needs tariffs to protect against a country that won’t play by the rules, he said.
Volpe and others, such as Brian Kingston, president of the Canadian Vehicle Manufacturers’ Association, a lobbying group for some automakers in Canada, believe the subsidies throughout the supply chain are far greater.
It’s not clear if the schism will close between environmental groups that want to see cheaper EVs and those that see Chinese EVs as a threat.
Freeland launched a consultation not only on tariffs, but also whether Chinese-made EVs should be eligible for government rebate programs, and whether there should be government policies on the data they collect on their drivers.
Dan Woynillowicz, a consultant at Polaris Strategy + Insight who has in the past worked at environmental groups, said if he had to make a bet, he thinks the government will end up adopting tariffs.
He said the auto companies are probably managing the costs of the EV transition in a way that’s best for their shareholders.
“As a consumer, competition is good because it leads to more choice and lower prices,” Woynillowicz said.
“By the same token, I’ve been very supportive of the investments made in Canada and the jobs that have come with it and I don’t want to see that decimated just so we can get some cheaper EVs on the market.”