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Canada Canada faces uphill battle to get EV rebate exemption

01:40  20 november  2021
01:40  20 november  2021 Source:   msn.com

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Local auto industry officials feel Canada must play the long game and not be afraid to use the leverage of critical minerals and trade dispute mechanisms if necessary to win an exemption from proposed American electric vehicle rebate requirements that threaten to damage the Canadian auto industry.

An electric vehicle charging station is shown at the Devonshire Mall in Windsor on Friday, November 19, 2021. © Provided by Windsor Star An electric vehicle charging station is shown at the Devonshire Mall in Windsor on Friday, November 19, 2021.

The rebates, worth up to US$12,500 per car, would only be applicable to electric vehicles made in U.S. plants with unionized workforces.

The Buy American bill was passed by the U.S. Congress Friday and now heads to the Senate for review.

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Automate Canada chair Shelley Fellows expressed concern over what she witnessed from U.S. President Joe Biden at Thursday’s North American leaders’ summit meeting involving Prime Minister Justin Trudeau and Mexican President Andres Manuel Lopez Obrador.

“It was so disappointing that there was no movement or open attitude from the President’s side,” Fellow said.

“He really blew off the Prime Minister after having flown to Detroit (Wednesday) to double down on the importance of the EV subsidy.

“However, I’m one of those people who thinks when you’re trying to make change, successes are a long time in the making. This is going to take a while to move the needle on.”

 An electric vehicle charging station is shown at the Devonshire Mall in Windsor on Friday, November 19, 2021. © Dan Janisse An electric vehicle charging station is shown at the Devonshire Mall in Windsor on Friday, November 19, 2021.

Fellows said the rebate program would have a devastating effect on the Canadian auto industry and the supporting supply chain. She said the impact would be worse than former President Donald Trump’s steel and aluminum tariffs.

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“It’s a disincentive to automakers to invest in Canada,” Fellows said.

“It would hollow out our industry and that has some real consequences.

“It would impact employment, innovation and new investment in technology.”

Canadian Association of Mold Makers president Jeanine Lassaline-Berglund said suppliers are watching these developments carefully. She added the uncertainty around the auto industry in the last decade is one of the reasons many in her organization have greatly diversified.

“As you can imagine, all producers that supply the auto sector are watching this unfold,” Lassaline-Berglund said.

“It’s important to remember that most of our members have diversified portfolios and may not be 100% dependent on automotive business today, although a good bunch still have a high percentage of work in that sector.

“With the work our government has done in navigating the CUSMA agreement, we are confident they have put our country’s position to the U.S. officials as strongly as possible.”

Canada faces uphill battle to get EV rebate exemption

  Canada faces uphill battle to get EV rebate exemption Local auto industry officials feel Canada must play the long game and not be afraid to use the leverage of critical minerals and trade dispute mechanisms if necessary to win an exemption from proposed American electric vehicle rebate requirements that threaten to damage the Canadian auto industry. The rebates, worth up to US$12,500 per car, would only be applicable to electric vehicles made in U.S. plants with unionized workforces. The Buy The rebates, worth up to US$12,500 per car, would only be applicable to electric vehicles made in U.S. plants with unionized workforces.

 An electric vehicle charging station is shown at the Devonshire Mall in Windsor on Friday, November 19, 2021. © Dan Janisse An electric vehicle charging station is shown at the Devonshire Mall in Windsor on Friday, November 19, 2021.

Centre for Automotive Research and Education director Peter Frise fears Canada has become caught up in domestic U.S. politics.

Biden’s Buy American platform was a pillar of his presidential campaign and it won’t be watered down easily.

“It’s locked down in a political process in the U.S. and there’s not a lot we can do right now,” Frise said.

“There’s a (U.S.) election coming up and each side has its own agenda. We’ve been put in a position that’s really an internal process in the U.S.”

One ray of hope is observers feel there are many American domestic interests that will eventually coalesce around the position of the Canadian and Mexican governments.

For example, vehicles made in the U.S. by Toyota, Honda, Volkswagen and Tesla would all fail to qualify for the rebate as their plants are non-union.

With many plants now located in right-to-work states in the American southeast, Fellows feels regional politics will come into play.

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“If I’m the governor in one of those states I’m not happy about this,” Fellows said. “Those companies not eligible for rebates, I expect will be raising more of a public stink.

“They’ve made massive investments in the U.S. and this sends a very negative message to them.”

Frise said the industry’s tightly integrated North American supply chain is also going to prove a very challenging hurdle to executing the legislation.

“The supply chain is entangled and it’s difficult to determine what is American or Canadian content because parts are going back and forth across the border,” Frise said.

“It’s not practical to untangle it quickly. That would take several years.

“The voice of industry itself is going to be important. I’m sure they’re making their side of the story known to U.S. officials.”

While persuasion is the preferred tactic, industry observers agree Canada must be ready to use whatever leverage it has.

Both federal and provincial government officials have sent letters to Washington making it clear Canada will trigger trade dispute mechanisms.

Related

The Americans have also been reminded of their desire for a North American supply chain to access Canada’s critical minerals needed for electric batteries.

“If they go through with this tax incentive, Canadians will demand we react equally,” said Ontario’s Minister of Economic Development Vic Fedeli when asked this week if accessing critical minerals need be a bargaining chip in the dispute.

“Ripping up a section of NAFTA 2.0 that was fundamental in both our governments signing it, that could deteriorate into a serious trade issue. This is a huge deal and it has consequences for U.S. jobs as well.”

Dwaddell@postmedia.com

Twitter.com/winstarwaddell

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