Honda is being whipsawed by a decreasing emphasis on electric vehicles in the United States and a rapid shift to electric vehicles in China. The two markets are moving in opposite directions, with companies regretting EV investments in the United States and facing intense competition from upstart EV manufacturers in China.

Honda is not a company that expresses public frustration, but there was a sense of disappointment in its announcement last week about cancelling plans for three models of U.S.-made electric vehicles.

The U.S. government indicated just a few years ago that it would provide policy support for a transition to EVs and encouraged automakers to invest. Honda did just that, including a new battery plant in Ohio in partnership with LG Energy Solution. Then voters sent Donald Trump back to the White House and he dismantled this industrial strategy within months. Honda and other automakers were left exposed. Financial losses and job cuts followed.

That’s infuriating. But here is how Honda describes what happened, filtered through the language of corporate communication: “Previously, with stringent environmental regulations fully implemented in the U.S. and other countries, Honda pursued EV adoption with strong determination that striving for carbon neutrality is a responsibility Honda, as a manufacturer of mobility products, must fulfill for the future,” the company said in a news release. “However, in the U.S., the expansion of the EV market has slowed down due to several factors including the easing of fossil fuel regulations and revisions to EV incentives.”

I live in Columbus, Ohio, and I wrote about Honda for nine years while covering manufacturing and energy for The Columbus Dispatch. The company’s main North American manufacturing campus is less than an hour from Columbus, with factories in Marysville and East Liberty, Ohio.

While Honda is based in Japan, it produces more cars and light trucks in the United States than its home country and also has a major presence in China.

Honda’s announcement included disclosure of a US$15.7 billion charge related to restructuring its operations, which means the company is poised to post its first annual loss in about 70 years.

Previously, Honda had said it would manufacture three electric models in Ohio: the Honda 0 – that’s a zero – SUV, the Honda 0 Saloon and the Acura RSX. Now, all three are cancelled for production or sale in North America. They join other U.S. models that were cut, including those that made it to production, such as the Ford F-150 Lightning pickup and those halted before mass production, such as the all-electric Ram 1500 pickup.

It’s not clear what Honda’s decision means for the Honda-LG battery plant that began production late last year in Jeffersonville, Ohio. That plant, which has about 600 employees, was going to provide batteries for the RSX and other models. “As our company assesses the impact of Honda’s announcement on our operations, we are in discussions with our parent companies regarding related future business opportunities that align with the technology and expertise we have developed,” says Caroline Ramsey, a spokeswoman for the battery plant, in an email.

Honda’s other plants in the state will use the capacity that was slated for EVs to produce gasoline models, including gas-electric hybrids.

The company has struggled with its EV strategy over the last decade. Its greatest success has been the Honda Prologue SUV, introduced in 2024, which is part of a partnership with General Motors and shares components with the Chevrolet Blazer.

The now-scrapped models, headlined by the Honda 0 series, were part of the company’s attempt to signal a new beginning, with fresh designs and new technology.

There’s just so much uncertainty broadly in the U.S. economy right now.

— Hannah Hess, director of energy and climate practice at Rhodium

Honda is a major reason Ohio is a leader in automobile manufacturing employment, trailing only Michigan and Indiana. These next EVs were going to be Honda’s statement about how it intended to compete in the market of the near future.

Now, Honda and other automakers in the U.S. market are left to watch and wait.

Rhodium Group, a research firm, issued a report this week that gives a sense of the scale of investment that took place in recent years and the cancellation of some of that investment.

In 2025, companies said they were cancelling US$22 billion in previously announced EV or battery manufacturing projects in the United States, the report said. This exceeded the $17 billion in new EV or battery manufacturing announcements made last year.

To get a better sense of what’s happening, I looked at the indispensable database of project announcements from Rhodium and the Massachusetts Institute of Technology Center for Energy and Environmental Policy Research. It shows a spike in investment in 2022, the year President Joe Biden signed the Inflation Reduction Act, a law with incentives for EV manufacturing and purchases. Companies announced $80 billion in U.S. investment that year, and another $47 billion in 2023.

About half of last year’s cancellations by dollar value, or $11 billion, involved projects announced in 2022. The largest was a $4.3-billion EV manufacturing project from General Motors in Orion, Michigan. That’s a lot of investment going up in smoke, but I also urge observers to note that most of those 2022 projects are still active, either operational or under construction.

What we don’t know is if the cancellations to date are just the start of a larger wave. “The outlook looks cloudier than it did a year ago,” says Hannah Hess, director of Rhodium’s energy and climate practice. The next steps, she says, will be determined by many factors, including consumer demand for EVs and automakers’ assessment of where the market is heading. “There’s just so much uncertainty broadly in the U.S. economy right now.”

One thing the Rhodium report doesn’t capture are layoffs at plants that remain open, and that’s something else to watch.

SK On, the South Korean battery manufacturer, said last week that it is laying off 958 people at a plant in Commerce, Georgia, that had 2,566 workers before the reduction. The company cited a decline in demand for EV batteries.

Some jobs and investment could come back. The United States could reassert itself as a place where the cars of the future are built.

But gyrations in policies have a cumulative effect, reducing confidence in the staying power of any one policy. The next time a U.S. president says it’s time to invest, automakers are likely going to react more carefully.

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In September, General Motors cut output at its EV plant in Spring Hill, Tennessee, following on the delayed opening of a new truck plant last fall. Last summer, Ford scrapped plans for a big electric SUV and cut EV spending. And this past winter, Stellantis paused manufacturing of some EVs while putting new emphasis on hybrid vehicles.

But from this pit of sagging expectations, one North American automaker is springing back. In August, Ford unveiled its “Universal EV Platform,” a new concept in affordable production that it labelled “a Model T moment,” in a nod to its origin story. Ford’s iconic Model T motor buggy was a breakthrough in mass production and simple design that launched the modern automotive industry – and today’s car-based society – by reducing the cost of the family car from $825 in 1909 to $260 by 1925.

Ford CEO Jim Farley says the novel production process – combining a new, US$3-billion battery plant in Michigan with a $2-billion assembly system in Kentucky – will bring the price of EV pickups and crossover vehicles down to US$30,000, or roughly half the average cost of new EVs today in the United States.

Farley says the breakthrough comes from charging a small, elite innovation team in California – led by Tesla veteran Alan Clarke – to reimagine the way cars are made. “We locked the doors and kept the project secret,” said Ford EV chief Doug Field. “It had permission to question everything.”

The new system replaces an assembly line with an “assembly tree,” on which the front, back and floor of the vehicle will be assembled separately, and then brought together at the end of the line. The vehicles – a midsized pickup at first – will feature 20% fewer parts and a floor that’s actually an economical, 400-volt lithium iron phosphate battery. “Our target is a five-year cost of ownership that will be lower than buying a three-year-old Tesla Model Y, and they are pretty cheap right now,” Field said.

Industry watchers were quick to note that many of Ford’s innovations resemble systems already developed by Tesla and also employed by Chinese competitors. “That was a watershed moment,” Terry Woychowski, a former auto executive, told Yahoo Finance. “Before you can beat somebody, you better catch up with them, so that’s a huge step.”

“We’re only in the second inning of this EV transformation,” Farley told The Detroit News earlier this month. “I don’t take anything for granted about the continuous improvement we have to make.”

But car-buyers continue to be spooked by high prices. A recent survey found that 73% of consumers report holding off from buying a new vehicle for budget reasons. While Ford’s plans for a $30,000 electric pickup might not be affordable enough for many buyers, other carmakers are also rushing to bring entry-level EVs to market: Chevrolet, Jeep and Honda all have sub-$30,000 EVs on the horizon.

Elon Musk, meanwhile, has abandoned his pledge to produce a $25,000 Tesla (the low-priced Model 3 sells for $42,500 in the United States), so critics are granting Ford the win for building North American–made EVs that just may compete with low-cost Chinese automakers.

With files from Mark Mann.

Rick Spence is the editor-at-large at Corporate Knights.

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Historically, EVs have been about $12,000 more expensive than gas cars, in large part thanks to battery costs. But as batteries become cheaper every year, EV sales have been growing exponentially. The cost of lithium-ion batteries plummeted 89% from 2010 to 2020, according to Bloomberg New Energy Finance. In 2016, batteries accounted for 48% of the cost of EVs. Today, that’s fallen to 26%.

It’s not the only trend driving the conventional car industry off a cliff.

Pandemic is fuelling “peak auto”

Other than spikes in leisure-wear sales, the pandemic has dramatically slowed consumer spending – and cars are the second largest capital expense for North American families, after housing. Seventy million U.S. households own two or more cars, and pre-pandemic, the average American worker spent five work weeks a year in traffic commuting to and from their jobs. Now that approximately 40% of the U.S. and Canadian labour force is working from home and corporate leaders and businesses have accepted that people can do so productively, some families will decide they don’t need a second car. This will have big implications for car sales.

While some studies have found that those who are still commuting often prefer driving solo to taking the subway or ride-hailing, KPMG projects that the work-from-home trend, along with more people shopping online, could take seven to 14 million cars off U.S. roads alone.

A growing number of pandemic-era commuters who don’t want to crowd into mass transit are going the micro-mobility route, fuelling sales of bikes, e-bikes and electric scooters – particularly in place of the staggering 60% of U.S. car trips that are less than five miles. Scooter-sharing companies Lime and Bird are the two fastest-growing firms in U.S. history – both reached $1 billion in market valuation within 12 months of launch. All scooter-sharing companies combined are set to exceed 500 million rides globally in 2021.

In Canada, Calgarians have taken almost two million rides on rented e-scooters. There are also pilot projects in Waterloo, Montreal, Edmonton, Ottawa and Kelowna. For a growing cohort of millennials debating whether to buy a car or use a scooter-sharing service at 35 cents a minute, the choice is pretty clear-cut.

Shifting national policies

National policies are already dramatically accelerating the adoption of EVs. For instance, Norway has the most aggressive goals globally, prohibiting the sale of any new fossil-fuel-powered cars by 2025. The target is already working. In December, 67% of all new cars sold in the country were pure battery electric vehicles, and when plug-in hybrid EVs are included, that figure jumps to 87%.

In November, Britain announced that it would ban the sale of new gas and diesel cars and vans from 2030 onward – five years earlier than previously promised.

In the U.S., California has banned the sale of new gas-powered cars and trucks by 2035. Considering that California has the fifth-largest economy in the world, the move sends a strong signal to American automakers. The signal would be even stronger if Canada and the incoming Biden administration instituted a North America–wide ban on new internal-combustion vehicle sales.

Closer to home, Quebec announced it will ban sales of new gas-powered cars from 2035. Montreal may do so by 2030. B.C. will follow suit in 2040.

Pension fund liabilities

Traditional car companies face another threat: pension fund liabilities. Legacy auto companies made historical commitments to retired employees. Many of these had defined benefits. For some car companies, these future commitments exceed the value of the pension fund. That gap between the value of the pension fund and the liabilities is called “unfunded liability.”

General Motors is one of the 10 U.S. companies with the largest pension-funding gaps relative to their market capitalizations. GM’s unfunded pension liability is a whopping US$14.4 billion according to S&P Global Ratings – that’s about 24% of the company’s current market worth. Ford’s is US$10.2 billion, or 30% of its market value, as of November 2020.

Their pension troubles aren’t surprising if you track the market cap of GM, Ford and Fiat Chrysler (FCA). Even if you combined the market value of these three legacy automakers and multiplied by six, it would still be less than the value of Tesla, at US$717 billion as of December 2020.

Total cost of ownership

Electric cars are not only becoming cheaper to buy; they’re also cheaper to drive and have serviced. While the traditional gas car has more than 2,000 moving parts, an EV has just 20, which means there are far fewer ways that an EV can break down. Maintenance costs for an EV are a stunning 50 to 70% less than for a gas car. Similarly, fuel costs for an EV are roughly 70% less, depending on the electricity rates in your province or territory.

For Canadians, EVs will eventually be cheaper to insure, too. Since Teslas come equipped with a number of autonomous safety features and have been found to have 85% fewer accidents per million miles travelled compared to cars with no autonomous features, Tesla is offering policies to California Tesla owners at 20 to 30% less than traditional insurance companies. The company plans to expand its insurance to other U.S. states in the future.

Autopilot overtakes gas cars

ARK Invest predicts the rise of autonomous EV fleets by 2024. Think Uber and Lyft but green and without a driver. The predicted cost of transportation will plummet from the 70 cents (U.S.) per mile car owners pay to just 25 cents per mile – that’s a two-thirds cost reduction. Who is going to buy a new car when they can get around effectively with “mobility as a service” (MaaS) for a third of the cost?

Traditional car companies are facing death by a thousand cuts: the climate crisis, the fall of fossil fuels, electrification, the rise of autonomous EV fleets, Tesla, legacy pension liabilities, shifting mandated national policies, and dampened demand for autos in general. According to Cathie Wood, ARK’s founder and chief investment officer, EV sales will grow nearly 20-fold, from 1.8 million in 2019 to 35 million, or 40% of total global auto sales, in the next six years. I predict that two major global car companies will cease to exist by the end of 2025. They will either go bankrupt or merge – as did Fiat Chrysler, which in December got EU approval to merge with Peugeot.

In the U.S., the switch from horse-drawn carriage to car was swift. In 1910, only 11% of passenger miles were by car; by 1920, it was 81%. Expect the same swift shift from fossil-fuel-powered cars to EVs. The demise of traditional auto firms will come far faster than we imagine.

Jim Harris is the author of the international bestseller Blindsided, which focuses on disruptive innovation.

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Carbon fibre is a material perfectly suited to electric vehicles. Manufactured from long strands of carbon blended with plastic resin (think fibreglass, with carbon replacing the glass), it’s far stronger than steel – up to 10 times as strong – and much lighter. Plus it doesn’t corrode. Owing to these advantages, carbon fibre has been coveted by car makers since it was first introduced in the early 1980s. Because of its steep price, though, it has until recently been used primarily in racing cars and next-generation prototypes. (Carbon fibre costs as much as US$7 per pound wholesale, compared to about 40 cents per pound for steel or 80 cents for aluminum.) The explosive growth in electric vehicle sales, however, creates a unique and potentially enormous market for carbon fibre – especially if the manufacturing costs of the stuff can be slashed somehow.

And this is where Alberta’s oil sands come in. Alberta produces nearly three million barrels of bitumen from the oil sands each day – heavy oil in need of expensive and energy-intensive processing to be turned into transportation fuel. The industry faces an uncertain and perilous future as the high cost and large carbon footprint of its product becomes harder and harder to sell as demand for oil begins to level off and eventually decline, in part due to the rise of emissions-free technologies such as electric cars. Might there be a place for bitumen instead in the carbon-fibre frames of those vehicles?

This was the question Alberta Innovates, the Alberta government’s research arm, aimed to answer with its Bitumen Beyond Combustion program, launched three years ago to begin exploring new commercial uses for bitumen. The program’s research identified a range of potential new markets, including asphalt for paving and the production of vanadium, a metal present in relatively abundant quantities in bitumen and in increasing demand as a component in new battery technology. But nothing else so far has shown the “major mid- to long-term potential” that carbon fibre has. What’s more, its greatest weakness as a transport fuel – its heaviness, owing to the very large carbon molecules that comprise it – becomes an asset.

“Bitumen is a bigger molecule, and you are competing with lighter oils as transportation fuel,” John Zhou, vice president of clean energy at Alberta Innovates, explains. “You are always at a disadvantage. But when you are making big molecules like carbon fibre, that high carbon in the bitumen compared with other oil becomes a competitive advantage.”

To transform bitumen into the lighter crude oils that are refined into gasoline and transportation fuels, oil sands operations either add a lighter petroleum product called diluent to their bitumen to make it flow down a pipeline to a distant heavy oil refinery or use costly, energy-intensive upgrading facilities that “crack” the bitumen into smaller molecules, turning it into synthetic crude. In recent years, oil sands companies have been developing “partial upgrading” technology, which cracks off a smaller piece of the bitumen molecule and allows it to be shipped without diluent. One of the heavy carbon molecules cracked off the raw bitumen is called asphaltene, and it shows enormous promise as a feedstock for producing the long carbon fibres that go into the lightweight, ultra-strong carbon-fibre panels used in cars like the Toyota Prius Prime.

Asphaltenes make up around 15 to 18% of a typical barrel of bitumen. Produce 100 barrels of bitumen and send them through a partial upgrader, in other words, and you have 15 to 18 barrels of asphaltene on your hands. The world’s current supply of carbon fibre is about 100,000 tonnes per year, a total that oil sands operators could easily exceed with the widespread use of partial upgrading.

“The supply is not the issue,” Zhou says. The big question is whether carbon fibre produced from bitumen could cut carbon fibre costs to the point where the material made sense not just for a flagship Prius but for Honda Civics and Ford Fusions. “If you can reduce the cost of carbon fibre by 50% or more, you will have a chance to get into medium-priced vehicles. So you will open up a much greater market.”

It’s an enticing possibility, especially for an oil sands industry battered by low prices, fleeing investment capital and a barrage of criticism over its expanding greenhouse gas emissions and other environmental impacts. “It’s early days in looking at the potential for carbon fibre production from bitumen; however, we think there’s value in looking at different ways of optimizing our barrels – value in the traditional sense and in potential environmental benefits,” says Carrie Fanai, who is leading Suncor’s participation in the carbon fibre project at Alberta Innovates. With partial upgrading technology perhaps only three years away from commercial-scale operation, oil sands companies will soon have stronger motivation to find uses for the by-products of bitumen processing.

“When you are making big molecules like carbon fibre, that high carbon in the bitumen becomes a competitive advantage.”

–John Zhou, Alberta Innovates

The carbon fibre market, though, remains a young and volatile one, and that means any plans regarding its future role come freighted with caveats. Cecilia Gee, an analyst with Lux Research who tracks the carbon fibre market, explains that carbon fibre is at present a niche product, and many factors beyond the price and availability of the raw material, in the automotive market and beyond, will determine future demand. At present, the use of carbon fibre in EVs, for example, is limited by a lack of standardized production and supply chain certainty, and as much as 70% of the cost associated with using carbon fibre comes from the high price of manufacturing and installing components made from carbon fibre – not from the cost of the raw material the oil sands might one day supply. Meanwhile, plummeting battery prices are taking some of the pressure off EV manufacturers to pay a premium to reduce the weight of their vehicles. BMW, for example, recently announced it will no longer be using carbon fibre in some of its electric cars as it expands production.

“Is there an opportunity for the oil sands? Yes,” Gee says. “Are there a lot of unknowns about that future? Also yes. But if they have the opportunity to make things more circular, more green, why not?”

In any case, Alberta’s carbon fibre industry is a long way from supplying frames for hundreds of thousands of Civics; at present, it’s not even an industry. In the wake of the Bitumen Beyond Combustion program’s final report in January 2018, Alberta Innovates freed up $2 million in seed money for a handful of initiatives, one of which is a laboratory at the University of Alberta now working on developing an industrial process for converting bitumen-derived asphaltenes into carbon fibre. The early results have been so promising that Alberta Innovates has already connected the lab with industry heavyweights like BASF and Mitsubishi Chemical. A representative from SGL, a market leader in carbon fibre manufacturing, has paid multiple visits to the lab and has made plans to connect the researchers with similar projects at the Oak Ridge National Laboratory, the U.S. Department of Energy’s top energy research lab.

These are, to be sure, very early days. There remain many hurdles yet to clear. But presuming that partial upgrading expands at the rate Zhou and his colleagues in the oil sands hope it does and that the lab research on bitumen-derived carbon fibre continues apace, there could be viable commercial-scale carbon fibre production in Alberta by around 2030 – which just so happens to be around the time experts predict electric vehicle sales will roar into overdrive worldwide.

Zhou concedes that from an investor’s point of view, the project is very much in the high-risk, high-reward category. At a recent funding meeting with federal officials in Ottawa, he compared it to the $50 million the government recently invested in General Fusion, a Vancouver start-up working on nuclear fusion reactors. Still, the long timeline and uncertain payoff don’t worry Zhou much. “If in 10 to 15 years we can create a multi-billion-dollar business in Alberta, I will be very happy,” he says. Significantly less time, come to think of it, than it took bitumen production to go from Karl Clark’s lab at the University of Alberta to the first mine site north of Fort McMurray.

Chris Turner’s most recent book is The Patch: The People, Pipelines, and Politics of the Oil Sands.

The post Is carbon fibre Alberta’s next profit gusher? appeared first on Corporate Knights.

 With files from Aleena Naseem and Toby Heaps

The urgency of transitioning to a low-carbon economy is becoming clearer by the day with the best science calling for increasingly drastic emissions reductions to help head off catastrophic climate change impacts. While a daunting task, the economic, social and environmental opportunities of transitioning into a low-carbon economy are significant.

An aggressive clean stimulus program to implement decarbonizing technologies at scale could bring Canadians substantial economic benefits, including GDP growth and hundreds of thousands of new jobs. The entire program would require investing a little less than 2% of GDP over the next six years. It would also enable Canada to emerge as a serious actor in the growing low-carbon technology market.

To demonstrate the economic prospects of various sector-specific targeted clean stimulus measures, Corporate Knights worked with industry, government and academic experts to develop The Capital Plan for Clean Prosperity. The plan has been divided into five sectors that have the biggest carbon and economic footprints in Canada: buildings, transportation, electricity, oil and gas, and heavy industry. Based on our calculations, “greening” the transportation sector could generate up to 257,000 new jobs and increase cumulative GDP by up to $56 billion from 2020 to 2025 (inclusive). In this analysis, transportation includes personal transit, public transit and freight. The transportation sector produces approximately 23% of Canada’s greenhouse gas emissions. Investing in reducing the sector’s emissions can make a significant environmental impact and help move more freely and safe lot of money at the pumps.[1]

With the federal election rapidly approaching, parties are introducing various pathways to reduce emissions from the transportation sector:

• The Conservatives are proposing to introduce a Green Patent Credit that would encourage the industry to develop, for example, more efficient electric vehicle (EV) batteries. The party also suggests regulatory changes for freight vehicles passing over the Canadian border to improve efficiencies.[2]
• The Liberal Party has committed to investing $51 million to expand their current zero-emission vehicles (ZEV) rebate to include used ZEVs.[3] They have also proposed earmarking $700 million to electrify transit and transportation and installing 5,000 EV charging stations. The party would require that new federal investment in public transit be used to support zero-emission buses and rail systems. The Liberals also promise an additional $3 billion per year in funding for urban transit in addition to enhancing Canada-wide transit networks.[4]
• The NDP calls for a large portion of federal transportation funds to be directed towards low-carbon transit projects. The party’s goal is to electrify all transit and municipal fleets by 2030 and have all new car sales be ZEVs by 2040. The federal ZEV incentive would be expanded, and the sales tax for ZEVs would be waived. EV charging networks would be expanded. The party also wants to start building a path to fare-free transit and expand rail and bus services into rural regions.[5]
• The Green Party would ban the sale of internal combustion engine vehicles by 2030, and ZEVs would become exempt from the federal sales tax. The party aims for all public transit to be zero-carbon across Canada by 2040. Public transportation connections would be extended into rural and remote communities. The EV-charging infrastructure would be expanded. A Green Freight Transport program would fund rerouting tracks for freight and rail yards away from populated areas.[6]

While commendable, these policies lack ambition, detail or firepower.

We conducted extensive calculations based on data from sources such as Statistics Canada, the International Council on Clean Transportation and the Insurance Bureau of Canada. These calculations point to a higher level of ambition, one that could be realized with a mix of policy, charging infrastructure and, most critically, a large chunk of change ($40 billion over six years) paid out from the public purse. Our calculations project that a clean stimulus of this scale could produce the following benefits:

• raise GDP between $47 and $87 billion,
• add 82,000 to 257,000 full-time jobs,
• increase tax revenues by $15 to $28 billion,
• drive direct monetary savings of $64 billion from 2020 through 2025,
• and reduce emissions from 168 megatonnes (mt) CO₂ equivalent (CO₂ e) in 2016 to 146 mt of greenhouse gases (GHGs) by 2025 (equivalent to taking 4.6 million cars off the road for a year).

The range in the figures is due to the use of different multipliers from different data sources.[7]

The policies that would bring us these numbers are the following[8]:

• Implementing a Quebec-style zero-emissions vehicle sales quota, rising to 15.5% by 2025 for passenger vehicles; total cost: $4.6B
• Closing the public transit funding gap; total cost: $22.5B
• Ensuring that all new public transit buses are ZEV starting in 2020; total cost: $2.5B
• Developing a nation-wide EV-charging infrastructure; total cost: $0.5B
• Establishing a federal grant system to allow for 50% of new freight trucks to be ZEV; total cost: $14.4B

Public investment needs

Implementing the aforementioned policies would require public financing of close to $40 billion over the next six years, of which $25.5 billion would be invested in public transit and $14.4 billion to cover the incremental costs of making half of new freight trucks zero emission. The first policy, ZEV quotas, mimics the policy in Quebec, which mandates that ZEVs need to be a certain percentage of all new vehicle sales. In our calculations, we scaled Quebec’s target (15.5% of all vehicle sales to be ZEVs by 2025) to be Canada-wide. The second policy, closing the public transit funding gap, would mean a total investment of $22.5 billion dollars over six years to improve public transit networks across Canada. The third policy would ensure that all new public-transportation bus investments are zero-emission, the incremental cost of which would total $2.5 billion. The fourth policy is to develop a sophisticated and extensive EV-charging infrastructure with a total investment cost of $500 million. This is an important way to increase EV adoption by limiting, for example, range anxiety. The fifth policy would be to establish a federal grant system to enable freight truck fleet operators to cover the incremental cost of making new vehicle purchases zero-emission.

The financing of these policies (excluding passenger vehicles) would be executed by establishing a federal fund, the Zero-Carbon Vehicle Fund. The fund would be financed by federal green bond issuances to raise the required $40 billion.

Economic and environmental benefits

Job creation: 82,000 to 257,000 jobs

The jobs created with these policies would be new, full-time jobs. Based on our calculations, 11,600 to 16,100 new jobs would be created in the personal transport sector, 46,100 to 191,000 new jobs in the public transit sector, and 24,800 to 50,000 new jobs in the freight industry, in sectors such as manufacturing, travel and tourism, and professional services.[9]

Increase in GDP: $47 to $87 billion

If the suggested policies were implemented, the GDP increase from 2020 through 2025 could range from $4.9 to $12 billion in personal transport, from $27.1 to $38.2 billion in public transportation and $15.3 billion to $37.3 in the freight industry. For the average Canadian, an increase in GDP could mean higher average income levels and lower unemployment numbers nationwide, including in well-paying blue collar factory and public transit jobs

Fuel and maintenance cost savings: $64 billion

Lower fuel costs and lower lifetime maintenance costs for EVs could save car owners $9 billion in total from 2020 through 2025. The public transport sector would save $1.3 billion also in fuel and maintenance costs, opening up the possibility to redirect these funds to finance a more extensive and reliable transportation network. The freight industry would save $53.8 billion in fuel and maintenance costs.

Increased tax revenues: $15 to $28 billion

By implementing the policies mentioned above, Canadian governments could receive $15.4 to $28.4 billion more revenue in taxes from 2020 to 2025. These increased tax revenues could offset at least a third of the cost of the programs.

Emissions: 13% reduction in the transportation sector

Currently, transportation represents approximately 24% of Canada’s total greenhouse gas emissions. When examining the sector’s emissions today, our recommended policies could reduce emissions by 22 mt CO₂e by 2025, or a 13% reduction from 2016 levels. As a total, these policies would achieve nearly 12% of the emission reductions needed to fulfill Canada’s commitments to the Paris Agreement.[10] This would be equivalent to taking 4.6 million cars off the road for a year.

These figures show that implementing these five policies could push Canada along its path to a low-carbon economy and bring substantial benefits for the Canadian economy in addition to environmental gains. The policies also could have indirect social benefits, for example a revived vehicle manufacturing sector and providing Canadians in rural areas and Northern Canada with more affordable transportation options.

Several Canadian organisations, including the Government of Canada, Clean Energy Canada, Energy Efficiency Canada, Pembina Institute and Smart Prosperity Institute, have explored the economic implications of investing in the low-carbon economy. Similarly, they found sizeable economic benefits (job creation, GDP growth, energy savings etc.) associated with a similar scale of investment across the sectors included in the Capital Plan for Clean Prosperity.

Corporate Knights is committed to providing the public and decision makers with information about the intersection of business, environment and society. Learn more about the rest of our Capital Plan for Clean Prosperity addressing buildings, electricity, oil and gas , and heavy industry on our website. You can find an overview of the plan here.

Clean transportation 2020–2025

*Driven by defined decarbonization policies.

** The wide range for the GDP estimate results from application of multipliers with varying degrees of conservatism.

*** Resulting from reduced energy costs.

[1] https://www.tc.gc.ca/eng/policy/transportation-canada-2018.html

[2]

[3][3] ZEVs produce no tailpipe emissions. Transport Canada considers the following vehicles to be ZEVs: battery-electric, plug-in hybrid electric, hydrogen fuel cell https://www.tc.gc.ca/en/services/road/innovative-technologies/zero-emission-vehicles.html?wbdisable=true&wbdisable=true

[4] https://2019.liberal.ca/wp-content/uploads/sites/292/2019/09/Forward-A-real-plan-for-the-middle-class.pdf

[5] https://action.ndp.ca/page/-/2019/Q2/2019-06-19_Commitments-Doc_EN.pdf

[6] https://www.greenparty.ca/sites/default/files/platform_2019_web_update_oct_6.pdf

[7] These calculations are based on best available models and are meant to be suggestive. The differences between multipliers depend on, for example, the state of the economy, the location of the manufacturing (in Canada or in a foreign country), interaction with demand for other sectors and exchange rates.

[8] We recognize that there are barriers to implementing some of these policies. For example, lack of charging infrastructure and dealer preference for selling higher maintenance internal combustion cars can be solved by charging infrastructure investments and quotas.Leasing rates require readjustment so that they do not penalize EVs and fuel cell vehicles.

[9] The jobs mentioned include direct, indirect and induced jobs. These numbers are not “net jobs,” and the creation of these jobs could be at the expense of other industries, depending on a host of factors.

[10] https://www.pbo-dpb.gc.ca/en/blog/news/closing-gap-carbon-pricing-paris-target

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The first concern is easing as batteries gain capacity and efficiency. For the latest generation, range exceeds 200 kilometres and some claim more than 400.

Determining range is tricky enough, since it’s heavily impacted by driving style, load, terrain and temperature.

Cost calculations are even more complex. Common wisdom is that electric vehicles (EVs) are more expensive to buy than alternatives powered by internal combustion engines (ICEs), but cheaper to fuel and maintain. As a result, EV advocates argue, it’s only fair to calculate total costs over a vehicle’s lifetime.

But, as we shall see, that’s easier said than done.

Our aim here is to compare the total cost of ownership, or TCO, of Canada’s top-selling ICE vehicles with battery-powered alternatives of similar size, features and quality.

The category leaders are the Honda Civic sedan, Toyota RAV4 compact SUV, and, this country’s sales champion, Ford’s F-150 pickup truck.

To challenge the Civic, we chose the revamped Nissan Leaf S. Hyundai’s new Kona Electric takes on the RAV4. And, up against the F-150 is … well, nothing. At least, not yet. A few manufacturers are developing battery-powered pickups, but none will go on sale before the end of 2020 and their performance specifications remain sketchy.
TCO comparisons assume EVs have higher purchase or lease costs, including price, taxes and interest. Their fuel should be cheaper, in part because battery power is more efficient than internal combustion. With fewer lubricants and moving parts, and less wear on brakes, they ought to cost less to maintain – although experts disagree on how much less.

“Maintenance costs are largely unknown,” says Steve McCauley, senior director, policy, at environmental research and advocacy group Pollution Probe. “We’re still dealing with the first generation of EVs on the road.”

“It’s difficult to assign maintenance values because every person’s maintenance cycle is different based on frequency of use, road conditions in their area, weather conditions in their area, and so on,” says Brian Miller, communications co-ordinator at Plug’n Drive, a Toronto-based non-profit committed to accelerating the adoption of EVs.

But the deeper we dig, the more complex comparisons become.

Purchase price seems simple, except that while comparisons are usually based on suggested retail price, most manufacturers offer a wide range of discounts, which can even be influenced by a buyer’s bargaining skills. Interest rates vary from bank to bank and dealer to dealer, and with a buyer’s credit rating. Financing costs depend on those rates, as well as on how much the buyer borrows rather than pays in cash.

The cost of batteries – the main reason for EVs’ higher price – keeps falling. When the first Leaf hit the streets, it was about $1,000 per kilowatt-hour of capacity. It’s now around $200, and further drops will change the cost equation.

Fuel costs are, literally, all over the map. Gasoline prices vary from province to province, and can rise and fall dramatically. Electricity rates tend to be more stable but differ widely from place to place. In addition, most jurisdictions offer time-of-use rates, which generally mean you pay less if you consume electricity during off-peak times. One result is that per kilometre driven, electricity is occasionally more expensive than gasoline.

With all this in mind, we’ll plug some numbers into a TCO analysis worksheet – the most useful we found – developed by Tom Lombardo, a retired professor of engineering technology and now president of Tohoca, a communications company in Rockford, Illinois.

Here are our assumptions:

• We use each vehicle’s suggested retail price, for models that are usually a step up from basic. HST or its equivalent is set at 12%. We did not include delivery charges or other dealer fees or, for EVs, the cost of a battery charger.
• Calculations are based on manufacturers’ claims for range and Natural Resources Canada’s Fuel Consumption Guide.
• Each vehicle is driven 20,000 kilometres per year, the “rule of thumb” cited by Statistics Canada.
• The gasoline price is $1.20 per litre, roughly the current average in Canada’s largest markets. The electricity cost is 8.7 cents per kWh, the off-peak price in Ontario, based on the assumption that EV owners recharge their vehicles at home overnight.
• Based on data from Pollution Probe and Edmunds.com, a leading industry analyst, the lifetime maintenance and repair cost for an EV is about 75% that of an internal-combustion vehicle. We used $100 per month as an average for the ICE, based on data from Canada Drives.
• Repair and insurance costs are about equal.
• The ICE buyer pays all cash. The EV buyer pays the same amount in cash and borrows the cost difference at 4.5% interest, with a 72-month term – the length most Canadian buyers now use, according to various sources.
• Each vehicle is kept for 10 years, so depreciation is 100%.
• We do not include EV subsidies, now available only in Quebec, up to $8,000, and British Columbia, up to $5,000.

Given our inputs, we found the $23,770 Civic LX with automatic transmission would cost $66,020 over 10 years. The Leaf S sticker price $36,798, would cost $63,816 over that same period.

The 10-year TCO for the $33,690 RAV4 XLE with front-wheel drive would be $78,373. The $45,599 Kona Electric “Preferred” would cost $73,388.

So, the EVs win in these categories. But TCO comparisons are meaningful only with specific local numbers.

For example, electricity costs nearly 17 cents per kWh in Halifax, where the Leaf’s ownership cost rises to $65,555 and the Kona’s price climbs to $75,004. Since Halifax’s gasoline price is close to our assumption, the Civic and RAV4 retain almost the same costs.

In New York City, where electricity runs 31 cents (Canadian) per kWh while gasoline is just 84 cents per litre, EVs lose in the comparison. But in Norway, where electricity rates are in the same ballpark as Canada’s but gasoline costs twice as much, EVs win hands down.

No battery-powered pickup trucks are ready for comparison, and it’s uncertain which will make it to market. The list includes the Havelaar Bison, planned for Ontario, and two U.S. models, the Bollinger B2 and Rivian R1T. Tesla promises one, but with no firm timetable.

All claim impressive range, payload and towing capacity, but none has performed in the real world nor revealed how large loads and rugged conditions would impact their range – a crucial consideration for working trucks.

The Rivian R1T, backed by a recent US$700 million investment by Amazon.com, seems furthest ahead. With the biggest battery available, Rivian says its range will top 600 kilometres. But the price in the U.S. will start at about C$94,000, and that’s for a base version with only 370 kilometres of range, making it more than double the price of a similar F-150.

Our conclusion: It’s clear that EVs are more expensive to buy or lease, and whether they overcome that handicap with lower operating costs depends heavily on fuel and power prices where you live.

As battery costs fall, the price gap will shrink, making it more likely that EVs will win any cost comparison, just as they already beat ICEs on environmental impacts.

Peter Gorrie is a Victoria-based freelance writer and editor who has covered environmental issues for more than 30 years.

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