A series of recent headlines in the Wall Street Journal reveal the extent to which government plans in Canada and the United States, to transition surface transportation from internal combustion to battery-electric power, are already showing signs of failure. “Ford Cuts Lightning Output in Latest Sign of EV Downshift,” reads one article while the editorial page says “The EV Backlash Builds: Companies cut output amid flagging demand” and “The Electric Vehicle Push Runs Out of Power.”
And there’s evidence the electric vehicle (EV) transition is also stalling in other countries. In Germany, EV sales are in freefall as the cash-strapped government tapers off subsidies for EVs. Battery EV registrations dropped 29 per cent from the previous year while plug-in hybrid registrations dropped 35 per cent year-over-year.
Manufacturers are also pulling back from the EV market. Recently, only a year after announcing a US$5 billion joint venture between GM and Honda to develop affordable EVs, the two auto giants pulled the plug on the venture. Even in China, which planned to be the world’s dominant supplier of EVs and batteries, is finding the transition hard to sustain. As Bloomberg reports, “China’s Abandoned, Obsolete Electric Cars Are Piling Up in Cities.” The subhead of the article explains, “A subsidy-fueled boom helped build China into an electric-car giant but left weed-infested lots across the nation brimming with unwanted battery-powered vehicles.”
All of this should trouble the Trudeau government, which mandated that all new light-duty vehicles sold in Canada be EVs by 2035 and has poured taxpayer dollars into the predicted future EV and battery production industry. For example, $28 billion for two EV battery plants (Stellantis-LG and Volkswagen), $2.7 billion for a new battery manufacturing plant in Montreal (which will also get $4.6 billion in production incentives with one-third coming from Quebec), and $640 million for a new Ford electric vehicle factory (also in Quebec). Government has made other smaller investments in rare earth mining and refining to incentivize production of the metals needed to make EV batteries. And of course, all this “investment” government comes atop consumer incentives to convince people to buy EVs. The federal government offers incentives up to $5,000 for the purchase of light-duty vehicles, and up to $2,000 for medium-heavy duty vehicles. Seven Canadian provinces offer additional subsidies.
Clearly, the Trudeau government is betting heavily, with the limited resources of Canadian taxpayers, on an EV future that increasingly looks unlikely to happen. Governments around the world are running out of money to subsidize EVs, consumers are increasingly reluctant to buy EVs, public charging infrastructure isn’t keeping pace with predicted consumer adoption of EVs, and as noted in a recent study published by the Fraser Institute, targets for consumer adoption of EVs are out of sync with historical timelines for the development of metals needed to make them, insuring a bottleneck situation in the not-too-distant future.
In fact, to meet international EV adoption pledges, the world would need 50 new lithium mines by 2030, along with 60 new nickel mines and 17 new cobalt mines. The materials needed for cathode production will require 50 more new mines, and another 40 new mines for anode materials. The battery cells will require 90 new mines, and EVs themselves another 81. In total, this adds up to 388 new mines. For context, as of 2021, there were only 270 metal mines operating in the U.S. and only 70 in Canada. And mine development timelines are long—lithium timelines, for example, are approximately six to nine years, while production timelines (from application to production) for nickel are approximately 13 to 18 years.
The writing is on the wall. The Trudeau government should reconsider the reckless gambling with taxpayer money that its EV agenda represents. It should withdraw the “investments” where it can, and reconsider the country’s 2035 all-EV mandate. These all look increasingly like bad bets, with Canadian taxpayers being the ultimate losers.
Author:
Senior Fellow, Fraser Institute
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