Canada’s secret deal with German automakers sends a bad message

There is something strange about the shiny new agreements signed with great fanfare by the federal government and the German automakers this week.

The Volkswagen CEO was in Toronto in real life for the signing of Innovation Minister François-Philippe Champagne amid none other than German Chancellor Olaf Scholz and Prime Minister Justin Trudeau. The leaders of Mercedes-Benz froze.

Praise and flattery followed, as well as much rave talk about the promise of critical minerals, battery production, the potential of electric vehicles, emission reductions and prosperity for all.

What about the agreements themselves? Secret. No solid explanation as to why, or a general description of what “Canada” signed up for. And that’s worrisome given the multibillion-dollar government subsidies and intensive efforts by Canada’s private and public sectors to build Canada’s economy into a world-class electric vehicle supply chain.

Government officials say this is because they contain sensitive commercial information.

And it would make sense if the memorandums of understanding contained information about money or its promises, an exchange of hands, or if commitments were made regarding investments or access to resources.

But it is not at all clear that this is the case.

Instead, there’s a lot of chatter about “exploring” and “sending signals” to the world and making Canada the hub for all parts of the electric vehicle supply chain. And a lot of attention is paid to how much energy Champagne has devoted to marketing Canada’s advantage – brandishing our billions and suggesting that he will readily pass them on to foreign investors.

We also know that Volkswagen will open an office in Canada to manufacture batteries, and there is speculation that the company will acquire stakes in Canadian mining operations. Mercedes-Benz will “cooperate” in setting environmental standards in the supply chain and in the production of critical minerals.

Surely the message here is clear.

“This is a really important signal,” says Matthew Fortier, president of Accelerate, a network of companies and stakeholders committed to building a sustainable zero-emissions vehicle supply chain.

The presence of Volkswagen, Mercedes and the German Chancellor shows global investors and Canadian businesses that there will be buyers for critical minerals and battery manufacturing efforts in Canada, he said.

“This could be a really important part of our industrial future.”

But if this is PR or branding, then why all this jingoism at the expense of reliable information about intentions?

Together, the companies and the government have created the impression that German companies will have privileged access to materials Canada stores in the ground, and the rest of the world will have to buy in order to fulfill the promise of zero-emission cars by mid-2019. next decade.

If these minerals really are that important, and there are so many of them in Canada, shouldn’t we know exactly who is seeking to control them? Shouldn’t we be aware of how Canadian companies can participate in the action, or what commitments come with Indigenous participation?

Critical minerals are on the move right now, caught in a maelstrom of international tension. China and its interests control the lion’s share of the elements needed to produce batteries for electric vehicles. U.S. President Joe Biden has resisted Chinese dominance by insisting that electric vehicle production be made in North America — a recent victory for Canada after his original intention was to favor only American production.

When it comes to electric vehicles, Canada’s ambitions are impressive and far-reaching. We collectively aim to develop mining projects to supply battery materials, manufacture batteries and vehicles, dominating the regional supply chain from top to bottom.

An active federal government through champagne has firmly taken center stage in this ambition, and it goes both ways.

On the demand side, it uses its regulatory, taxing, and subsidizing powers to induce—and then eventually force—consumers to buy electric vehicles. But demand exceeds supply, and queues act as a deterrent.

On the supply side, Ottawa is using its fiscal power, its influence over natural resources, and its international outreach to encourage, if not outright payment, investment in many parts of the production chain. But the ingredients are constantly changing thanks to aggressive innovation.

Can Ottawa and its incentives keep up with this pace?

Fortier and many others believe that government plays a valuable and even important role in this space, but it comes with huge challenges. Canada is vying for international attention and investment, so its ability to offer billions in subsidies is critical, he said. But what is also needed is the development of a workable national strategy that accelerates permits, coordinates the development of key mining projects, links in research, development, battery technology, recycling and artificial intelligence.

There is no Canada yet, despite the seemingly limitless energy of champagne.

And no amount of vigor does away with the need to be clear and accountable for the large sums of Canadian money and resources that he manipulates to the big multinationals in the name of industrial strategy.

At each stage, we must know the rates, costs, benefits, and intentions.

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