The world’s supply chains have endured many blows this century: 9/11, the global financial crisis, the Fukushima earthquake, Brexit. But even in that context, the past year stands out. There was the abrupt shutdown of Chinese factories, the international scramble for masks and PPE, virus-containment measures that grounded airplanes for months, and port logjams. Then, in what’s surely the ultimate symbol of the COVID-era trade chaos, one of the world’s biggest container ships became wedged across the Suez Canal. A team of dredgers and tugboats finally dislodged the massive Ever Given. But there are signs that, in the wake of the pandemic, things won’t be going back to the way they were. As Brian Deese, the top economic advisor at the White House, tweeted after the Ever Given was freed: “Just another reminder of how imperative it is to ensure the resilience of our supply chains going forward.”
The U.S. is aiming to reengineer supply chains to serve new priorities around national security, workers, the environment and geopolitics. For the Biden administration, these networks are the foundation of a new American industrial strategy designed to reshore manufacturing, invest in electric vehicles, batteries, semiconductors and other clean technologies, and win “the race for the future” against an ascendant China.
For Canada, it could be an opportunity to recapture lost ground, according to Trading Places, a new report from RBC Economics. New Canadian industrial strategies, combined with a stronger strategic trade alliance with the U.S., would give Canada a foothold in the supply chains that will drive technologies of the future. It could help rebuild export muscle that was lost in recent years as Canada’s share of the U.S. market shrank and residential and consumer spending took over as drivers of economic growth. It could also give Canada the chance to revitalize traditional sectors set to be disrupted by the shift to green technologies: autos, energy and metals and minerals that accounted for more than half of exports to the U.S. or $227 billion in 2019.
Success isn’t assured as other countries vie for a role in the supply lines supporting the world’s largest economy. But Canada enjoys a lot of advantages going in, including deep integration in North American auto manufacturing, a free trade pact with the U.S. and Mexico, and deposits or production of every critical mineral used in the manufacture of EV batteries.
To compete for investment, Canada will need to consider modern policy tools to support strategic goods like EVs and batteries, particularly as other countries offer incentives and subsidies. It will need to establish priority sectors for investment, such as infrastructure, and develop more robust R&D and skills strategies. It will need to work closely with key international partners. The payoff could be sizeable, helping Canada push toward an ambitious but reasonable target of $1 trillion in additional exports by 2030.
[00:00:02] Hi, is John here, I have a question for you, do you drive an electric vehicle? Yeah, probably not.
[00:00:12] You know, rarely a week goes by without another big announcement about the switch to EVs, GM, Jaguar, Volvo, they’re all aiming to be largely or entirely electric by the mid 30s. And more and more cities like Tokyo and Montreal say they’re not going to allow anything else on their roads. And here in Canada and EV battery supply chain just moved one step closer to reality thanks to a partnership between Ottawa, Quebec and Lille or Lyon Electric. To build a one hundred and eighty five dollars million battery factory north of Montreal is centered around. A new report from RBC Leadership Group predicts EVs will make up one quarter of all new vehicle sales by the end of this decade. But right now, when it comes to drivers, the U-turn lane is awfully empty, with global sales sitting at just four percent. So what do we need to change that? And what role can Canada play? It’s one of the biggest opportunities and challenges in the decade ahead. Here’s why. Joe Biden has already declared he wants to reengineer North America’s supply chains, and he’s promising the whole federal fleet will be made up of zero emission vehicles. If we get game, we can build more factories of the future and all the technology that goes into a supply chain, especially the beating heart of an SUV, the battery.
[00:01:46] This is Disruptors and RBC podcast, I’m your host, John Stackhouse. We’re going to speak with one of the big three automakers, General Motors, in the second half of today’s episode, so I hope you’ll stick around for that. But my first guests have spent a lot of time thinking about the opportunities the EV revolution represents for Canada and about the speed bumps we might run into on the road to a fully electrified future. It’s my pleasure to introduce Sarah, the CEO of Propulsion Quebec, and Konstantin Amitav, the CEO of Ottawa based G Batteries. Welcome, both of you to disruptors. Thank you. Pleasure to be here, Jim. Maybe we can start with your back story.
[00:02:35] Sarah, let’s let’s start with you. What is propulsion Quebec all about? How did it begin and what are its goals?
[00:02:42] Well, it all started in 2017. That was really at the initiative of the government of Quebec. We thought that there was such great potential for the development of the electric and smart transportation industry in Quebec that we should be investing in a nonprofit organization whose mission would really only be to accelerate the growth of the industry in the form of a cluster where you have the companies that are manufacturing products, working with the clients, the fleet operators, for example, the whole ecosystem coming together to really grow the industry and make it a larger contributor to the province GDP and province economy. So that all started about four years ago. Since then, we gathered two hundred and fourteen members that are mostly companies working in five different subsector. So we have companies that are manufacturing electric vehicles in Quebec. We do not manufacture passenger cars. We manufacture everything else electric bikes, electric trucks, electric and specialized vehicles for garbage, for example. Then we have companies that are manufacturing, charging infrastructures or operating networks. We have manufacturers of components for connected, smart, autonomous vehicles. Same thing for smart infrastructure. And finally, we have members that are offering services in the new economy for mobility. So car sharing, car pooling, bike sharing, that kind of thing.
[00:04:15] I can see why you call it propulsion, because it’s it’s not about the vehicles. It’s about getting people and things from one place to another, which requires propulsion and propulsion, requires energy. And one of the best sources of energy we have in this country is electricity, and that’s stored in batteries. Konstantin, give us a bit of background on batteries. What what’s it all about?
[00:04:39] Yeah, absolutely. So we developed a solution that enables us to charge lithium ion batteries much faster than any conventional way, publicly known today without damaging the bathrooms. So in other words, we have developed a software based solution powered by machine learning that enables us to improve performance of lithium ion batteries that already exists on the market today.
[00:05:02] By means of software and our story, we have thought hard of what would be the simplest way we as a society can change but have a huge impact on greenhouse gas emissions. And we determined that. We realized that the simplest way for us is to switch from internal combustion engines to electrical vehicles. First of all, from the driver or user perspective, nothing really changes. You still go from point A to point B, you still perhaps may be enjoying the electrical car more than internal combustion vehicle. While you’re not changing your diet, your exercise routine, you don’t need to do anything special. You just get into your car and you’re still driving while you’re able to reduce greenhouse gas emissions by a third around the planet. So that’s what’s driving us. What’s driving us, still driving us. And that’s what we want to do, is to accelerate the adoption of electric vehicles by enabling them to charge as fast as it takes to fill up a tank of gas.
[00:06:01] I feel like I’ve heard about electric vehicles all of all of my life. And yet, as I said in the introduction, we’re still feels like an early days, four percent of global fleets. If that’s so, I wonder if you can give us your sense of how advanced we are. What’s the what’s the reality versus the hope in this field?
[00:06:20] Well, there’s really two different answers to your question. There’s personal transportation with cars and there’s all other types of vehicles for cars. We have gone from a early adopter emerging market to the more mature, I would say, market where all manufacturers have announced and EV model. So really we have access to different kinds of models. And I’m really talking about Québec here. We have great access to a public charging network. I myself almost answered your question at the beginning, like. A person who drives an electric vehicle, I’ve tried all different kinds of models, I’ve traveled in all types of climatic conditions, have done pretty much all types of journey that you can think of.
[00:07:12] And really, it’s it’s exactly, as I said mentioned, it’s just more fun. And it’s the same. I mean, you just have to take a break sometimes to charge. But the technology is evolving very fast for fast charging. And so really, we are we are now in a very mature, much more mature market and other types of vehicles. We are still in the R&D trial state. Some of them are already on our roads. Like busses, for example, are much more advanced than transportation of goods, types of products. So it’s we are getting there. We’re sort of following the same track that we are seeing for cars, but with a little lag.
[00:07:50] But that’s very common in innovation, that industrial applications tend to be much more advanced and consumer applications. There’s all sorts of economic reasons for that. So maybe that logic is just plain playing out here and we’ll see that curve accelerate with time.
[00:08:06] And I would add that because I think the podcast is probably followed by a lot of people that are interested in investing and things like that. I think this is a very sweet spot for investment in industrial applications for EVs because it’s at an early stage. But we are really seeing the same type of adoption that we are seeing in the B2C market. I think it’s a great spot for investment.
[00:08:27] Well, it’s a bit like the computer industrial computers were fairly well advanced. They seem ancient now, but in the 60s and 70s and then the personal computer took off in the 80s in a whole new opportunity emerged with that because one of one of the barriers to that application is, is battery and battery storage, as you explained in your introduction to batteries. And it feels like we’ve been wrestling with the battery question in this country also for four decades. Where are we at on that journey? Are we closer to the end of in terms of having great battery experiences for consumers or are we still in the early days?
[00:09:10] I think just like Sara mentioned, the number of applications between industrial and the personal usage of the vehicles. So I feel that Vikas the consumer cars, we are already at the level of comfort zone, especially if you start looking at Tesla like vehicles, the amount of range that you can get there, a number of kilometers that you can get out of the car on the fuel charge, on a Tesla car. It’s probably already more than what we had as a family when we arrived at Kennedy. Ninety nine, when we bought a brand new Toyota Corolla on a full tank of gas. So you already have a pretty good range of, let’s say, three to four hundred kilometers from a charge that’s more than enough to get you around town, as one of my investors often jokes, because it takes me seconds to charge my car. I says, how do you do it? So when I drive into my garage, it takes about twenty seconds to plug in my car and I go home and I sleep. When I wake up in the morning, it’s charged. So from that perspective, 90 percent of electrical vehicle car owners have a luxury of charging their cars at home. They don’t even want to think about charging stations or gas stations. They charge at home and they go in there. Are they? There’s a range of sight in their head. But once you get into electrical vehicle, once you get around the dynamics of charging and the schedule, most of the time you are OK.
[00:11:58] It’s an amazing race, if I can use that expression in terms of these technologies and of course, every country in the world seems to be in the race and number of countries with terrific tech ecosystems, including the U.S., right next door. What do you both think we have as Canadians that’s going to help us stay at the front of the pack in that race to the next generation of technology?
[00:12:21] Maybe. Maybe I can go first. I’ll speak for Quebec, because this is really my level of expertize. First, we have a long tradition of inventing new types of vehicles. And we also have had Hydro-Quebec for seventy five years. We have deposited lots of patents for batteries, for example.
[00:12:39] So really we have this expertize and this is also present in other in Nova Scotia for batteries in Ontario as well. I mean, there is lots of expertize in this country very specialized and highly targeted on innovation. The other thing that’s super important is that we have these strategic and critical minerals for batteries in Quebec. We have lithium, graphite, a little bit of nickel and cobalt, and there’s a lot of nickel as well in Ontario. So these are very strategic, I would even say geopolitically in terms of energy security, because just like Asia and Europe, North America will have to build some kind of continental autonomy for the supply of batteries for electric vehicles.
[00:13:26] We’ve just published a really interesting report, it RBC on the supply chain revolution that’s just starting in North America. It extends across a number of advanced technologies. But everything you say rings true because we have almost historic opportunity to create new elements of those new supply chains for the vehicles of the future and our rare minerals, our natural resources, as well as our our technology and our ability to manufacture and assemble really strong assets for the country. One of the things we’ve discovered in our research is the important ESG value on the rare minerals side that we need to, I think, advocate more as a country, the way we extract and develop and process those minerals that you mentioned, including indigenous ownership, including environmental standards that can and will continue to be improved but are better than most jurisdictions in the same business are important assets for us.
[00:14:31] Absolutely. And I would add that not only is it sustainable, but it is secure and it is stable. We are working at the Boston Globe with the Global Battery Alliance to develop a traceability pilot project so that you could literally scan bar code on your batteries and see where everything is coming from. So really, we could not only sort of claim that it is an easy product, but we could even trace it and prove it.
[00:15:00] In a way, that’s a great sales pitch. But you’re in some ways the customer or the intermediary, you have to put those inputs to to work through through batteries. And presumably you could do that in a number of jurisdictions. Why? Why Canada?
[00:15:15] Canada is one of the leaders in the mining industry for oil and gas, which can be translated over to mining any other rare earth metals or minerals. But on top, if you talk specifically about batteries, it takes roughly about seven to eight units of energy to build one unit of energy of Bathory. So for one kilowatt hour of battery, you need roughly about seven or eight kilowatts of energy.
[00:15:42] And a big question that the world usually asks is where is the energy coming from? Are you burning coal? Like, what are you doing is renewable or if it’s not, is the batteries actually what Sara was talking about versus coming from like is the battery is actually as green as we’re talking about. So Canada has this fantastic resource, which is hydro electricity, which is as green as it gets. We have an excess of this electricity in Canada, so we are able to build a lot of the greenest batteries. Is the local supply of materials at potentially lower cost? Canada is absolutely phenomenal place for. I might be a bit biased because our company and what we can do with the technology, but there is Hydro-Quebec, there’s our companies, there’s many battery companies in Canada that are taking the technology to the next level. It’s not just about taking the minerals, relatively inexpensive electricity, combining them together. If we can spice it up, because the technologies that we have, the technologies that Canadians have developed, Canada can become a leader in battery production and manufacturing.
[00:16:47] But that’s a great vision for what we can be. Konstantine, what’s holding us back? Because when we look at the investment landscape, Canada does have a lot of an enormous number of strengths. But we also don’t win as much investment, especially in emerging sectors, as we might like. What are some of the challenges we need to come to grips with to up our game?
[00:17:10] To be honest about this. You’re having this discussion quite often and we can’t quite pinpoint why don’t we have Gigafactory in Canada? We feel that it’s just a matter of months or years to come before a big player is going to enter this market.
[00:17:26] You mean like a Tesla Gigafactory, like Tesla Gigafactory or maybe a large body manufacturer? You’ll see what I have just said. This opportunity, maybe they haven’t seen it. Maybe there’s a better economics elsewhere. For now. I cannot pinpoint why they’re not doing this yet, but I feel that the economic packages that are coming in from the government with the growth and interest in electrification is hopefully better trade agreements between Canada and the US and the rest of the world. I believe it’s a no brainer and I believe in the next coming months, maybe years of the longest, we will see this happening here.
[00:18:02] Sarah, what do you think we need to come to grips with to up our game?
[00:18:06] Well, you mentioned it. I think that to attract an international player like that, we will have to play in the field of fiscal incentives. I know the government of Quebec is really on the ball, completely aware and looking for partners. And we need to make a concerted effort to really go after them and present a lot of those assets and make the pitch. So we need to be proactive. You know, all of us are trying. So we need to do to be very proactive.
[00:18:40] Yeah. And I don’t think we as Canadians quite appreciate how aggressive a lot of those states are in terms of soliciting, to use your word. Right. The opportunities, they don’t wait for the door to the door, bell to ring.
[00:18:52] You’re right. But we have the natural resources at the end of the day. So I think that we are very well positioned.
[00:18:58] Do we need to play hardball with those resources?
[00:19:02] The potential outcome is so great. You said almost historic.
[00:19:07] I would remove that almost and would go all in with historic. So, yes, we we really need to be aggressive. I think we we cannot miss this chance.
[00:19:17] Sara, how quickly is this moving? Because we’re all so consumed with the pandemic. Governments are consumed with vaccines and bio manufacturing, understandably. But there’s this this other shift that’s going on. How quickly is it moving?
[00:19:32] Super fast. This is a window of opportunity that won’t last forever. I think in Canada, Canada’s economy has done well during the pandemic compared to others. And I think that this might help us in the race because it might have slowed down everybody else and we exactly at the moment where we were accelerating. So my intuition would be that it was a good thing for us constantly.
[00:19:56] And Sarah looks at this from an ecosystem point of view, certainly from a public policy point of view, and has shared how governments may be viewing this. You come from the perspective of an entrepreneur and a startup. How much time do you think we have? Is this a matter of of months or years in terms of getting this right?
[00:20:16] As Sarah has mentioned, everything moves super fast. As soon as the guards of condemning borders, everything is going to go down. I feel the urgency in the growth and the demand for batteries that we hear all over the world. Battery manufacturer giga factories are going up everywhere. Europe, states, Asia. They’re just growing like mushrooms to be I feel down touch land of Canada is going to be flooded because the offers I don’t have a crystal ball, but I feel we are right at the inflection point, if I can call it where I believe it’s it’s about to get big.
[00:20:51] And if all this comes to pass, what in your mind does Canada look like in 20, 30 or 20, 40, maybe share with us your vision of where we can where we can get to?
[00:21:03] Well, this is a really good question because I’m obsessed with this question every day. So the first thing that I thought would be great is that if we would implement public policies, incentives to really help the transition to electric, we really wanted to boost these kinds of. Policy so that in 20, 30, 20, 30, five, with parity of price, you will really have an extreme boost in the market on the demand side. Now, what we need to do is to make sure that we seize this opportunity to produce enough vehicles and infrastructure to meet this demand and not import from abroad. Not so in 2030. We are not only able to meet our own local demand, but we are a major exporter of solutions for everybody who would like to transition to two electric fleets.
[00:21:55] This is such a fascinating conversation and a really, really important one. Sarah and Konstantin, thank you both for sharing your time and your perspectives. Pleasure. Thank you, John. It was fun. Sarah is the CEO of Propulsion Kobuk and Konstantin Commutative is the CEO of G Batteries after a quick break. I’ll be back with David Paterson from GM Canada.
[00:22:22] You’re listening to Disruptors and RBC podcast. My name is Sam Phillips, senior director of Economic Thought Leadership, behind that report on TV that John mentioned a few minutes ago. It really shows the urgency of this conversation among our findings. Tens of thousands of jobs could be at risk if Canada’s auto sector doesn’t pivot to any specific components. But the opportunity is also huge. A new continental trade strategy boost exports by a cumulative one trillion dollars by 20 30. You can find the full report at RBC dot com slash trading places now on with the show.
[00:23:01] Welcome back. Today, we’re talking about the road ahead for electric vehicles and how Canada and Canadian companies can play a huge role in the EV revolution. For Part two of the conversation. I’m joined by the vice president of corporate and environmental affairs at GM Canada, David Paterson. David, welcome to disruptors. Thanks, John. David, I don’t want to adjust, but I will. We’ve both been around long enough to have seen this movie or versions of it and probably feels a few times just harking back to. It’s been twenty five years since we were asking who killed the electric car? And now we’re seeing announcements like one hundred million dollar investment from the federal and state governments in a new battery factory that I mentioned earlier. In your mind, what’s different this time?
[00:23:46] Well, I think we are at an inflection point at last where a lot of the the big disruptions that we’ve been planning for many years in shifting to electric vehicles and all kinds of other technology that range from self-driving cars to flying cars are sort of on the horizon. And that sounds wild, but you don’t get there unless you take some pretty bold leaps. Technology is now at the stage where we can start to make this big change. And we’ve come out from General Motors and indicated that our intention is to effectively have all of our light duty vehicles, the electric vehicles, by twenty, thirty five. And that means everything from small city cars up to pickup trucks being fully battery electric.
[00:24:34] We’re not talking hybrids and sort of half gasoline, half battery. We’re talking about full battery vehicles. That’s a big leap. That’s a pretty ambitious change. We’re not the only ones. Lots of companies in the auto industry are now starting to to map out that trajectory of change, which is really the largest technology shift since we moved away from orses. But we’re finally at the inflection point where we can see over the horizon and it’s going to mean a lot of change right through a huge industry.
[00:25:04] And it’s interesting, you mentioned horses. We went from horses to the Model T without a lot of state involvement. What does that tell you about the state of play now in the EV sector that we’re seeing governments like ours and the Biden administration kind of leaning into this revolution, as you call it?
[00:25:21] Well, since the shift to the initial automobile world, we also have an incredible thicket of regulations that come with the incredible economic benefits we get from manufacturing automobiles. And so I tend to think of those in three big clusters. First of all, there is a very long list of safety regulations, everything from your seat belts to your warning signals. And it’s quite something to design a vehicle to meet all of those. Secondly, you have the traditional fuel economy regulations and the actually the auto industry has done extremely well there, where one of the few industries that’s actually meeting its targets for making sure that the internal combustion engine vehicles we produce are getting better and better. And then the third one we forgot about, which was NAFTA. And lo and behold, as we brought on the U.S.A., we’ve now adopted an incredible set of challenges in terms of meeting the local content requirements. So any engineer that’s going to develop a vehicle and put it on the road in three or five years has got to know that they can deliver that vehicle and meet all those regulations. And so it’s challenging. And and so government is deeply involved from a regulatory point of view. But they also see the opportunities that come from being involved from an economic point of view. And this is one of our top two industries in Canada when it comes to jobs. And it’s not just the jobs in the factories, it’s the jobs in the supply chain. And and more and more in the technology development side of it, too.
[00:26:51] You talk about the race. Many see it as a race against time. And we do have only a matter of years and certainly not many decades to get this right. How is GM going about innovation and beyond GM?
[00:27:05] The whole supply chain of creating almost a new industry is the same industry, but in many ways it’s very different in a very short span of time. That’s got to be a different innovation challenge from anything you’ve seen before.
[00:27:18] Yeah, it seems to be accelerating at an incredible pace. And really the shift in one area, which is the shift to electrification, is getting a lot of the attention. But we sort of start off at General Motors with our North Star, which is to kind of get everybody up in the morning saying, what are we trying to achieve? And for us, it is a world with zero emissions. In other words, moving to electric vehicles, but also a world with zero crashes and zero congestion in our cities so that we don’t spend all our time sitting in traffic. Those are pretty audacious goals to get to zero. But now we can see zero. And the technological challenge for that is batteries. It’s all about batteries. And so the future of electric vehicles and getting there and getting people. Who adopt these vehicles, which is a big, big challenge, getting consumers to make the switch comes down to the cost and the range of the batteries. So our future is about chemistry.
[00:28:12] Walk us through, David, especially for people. I’m not a gearhead, so I’ll be in that in that camp. What exactly the battery challenges. I just finished Bill Gates book on how to avoid a climate disaster, and he’s got a really good take on the battery challenge. And just that simple picture of the more you need from a vehicle.
[00:28:32] And he includes airplanes in this, the bigger the battery is. And you get to kind of a point on the curve where the battery is too big for the vehicle if you want to go far distances. So that’s one of the challenges that you’re up against. But how how should we be thinking through the battery revolution and what needs to be accomplished?
[00:28:51] Well, in its simplest sense, for a fully electric, battery driven car, what we want is batteries that give us more range and lower cost. What we are searching for on the horizon is something a lot of people refer to as price parity. Wouldn’t it be amazing if we could produce an electric vehicle that is not only the same cost as an internal combustion engine, but maybe even cheaper, and then all of a sudden you as a consumer are going to be delighted because you’re going to have something that’s more affordable to maintain and run. You’re not going to be doing all the same things you did with your transmission and with your engine. You can just plug it in when you come home and you’re going to have a full tank in the morning and you will be able to really enjoy a battery driven experience because you’re going to have, for example, instant talk to the wheels, the acceleration in these vehicles from the smaller vehicles like the Chevrolet Volt to the pickup trucks that we have coming out later this year.
[00:29:50] I mean, we have a Hummer EV, I think very appropriate that it’s a Hummer that’s coming back is the first big pickup truck into the market. Is it still going to be called the Hummer? That’s such an iconic name. It’s going to be called the Hummer EV. It’s got a beautiful grill on the front of it, but is fully battery electric. This is a 1000 horsepower equivalent vehicle. And we had General Motors, we know pickups, we know the large SUV market.
[00:30:15] I’m fascinated by the power of SUV and truck sales. It is the vast majority of vehicle sales in the country, as you know.
[00:30:22] And even though people say they’re committed to the battle against climate change, we continue to buy SUVs and and trucks in extraordinary numbers. So if we’re going to bend the curve significantly, it’s got to be through that path of those larger vehicles, many of them used by people who need them for terrain, for distance, for the geography that we love in this country, but is not necessarily friendly to that kind of volt vehicle that you mentioned. Is it that simple that rolling out this new generation of SUVs and Hummers is in a matter of years, going to flip the switch, if I can put it that way, to mass adoption of EVs?
[00:31:06] Adoption is a is a really interesting challenge. We’re going to need bigger batteries that have lots of range and will support the size of vehicles. People are looking for large families of four and several hockey bags. You’re not going to fit in small cars and they’re not going to work in terms of real work done across Canada, especially in rural areas. And so we can’t be providing mobility for just one portion of the population. It’s got to be for everybody and therefore you’ve got to continue to develop batteries. So for us at General Motors, we’ve made some very big bets. We’re building a three billion dollar battery plant in Ohio. We have an existing one in Michigan, and we’re going to be building more of them. But we’re changing the technology as we go. So we’ve set out with some pretty audacious goals to move, for example, from the battery range that you get on the Chevrolet Volt, which is about four hundred kilometers up to a range of a thousand kilometers. But you also need to do it in a way that doesn’t just make it twice as expensive. So over the next decade, we’re going to need to help incentivize consumers to be able to get into more expensive electric vehicles. We need to educate people. We’re just launching a major national television and online campaign called EV for everybody. But we’ve got a task to educate. We’ve got a task to make sure there’s a charging network. That’s a big challenge. And condos, people don’t have proper charging. So these are big challenges. We’ve got a decade to get it solved, but we can do it.
[00:32:38] You mentioned the education challenge. What is what is the biggest education challenge? What don’t most of us get that you’re hoping will will better understand?
[00:32:46] Well, I think there is a lot of apprehension about any technology that is different, although I’d like to think that Canadians are usually very early adopters. So people are wanting to know about the range of the vehicle range anxiety. And so that’s part of the. Challenge on us to get batteries that will give you the same kind of range as you can get with your current vehicle, so we have a big job to do, but then come back to the governments. They’re saying, oh, boy, we’re going to see a big change here. We’re going to be seeing some our engine and transmission plants starting to be less busy. And we’re going to need to think about battery plants. Well, what’s it take to create a battery plant? And we’ve got all these minerals here in Canada. Is that going to be something that’s helpful? And so there’s a bit of a I think a battery. Klondyke, happening right now. Everybody is kind of running as fast as they can to make sure that they’re going to be part of the development of jobs for the creation of batteries.
[00:33:38] I love that expression of battery. Klondyke panning for Ion’s. You mentioned a couple of the big investments GM is making in the battery space and those facilities were in the in the US. Same is true for other companies. Tesla comes to mind.
[00:33:57] What does Canada need to do to get a bigger share of that battery? Klondyke?
[00:34:02] Well, I think, first of all, it needs to have the long term confidence that it’s going to come anyway because this change to battery electric vehicles and all battery electric vehicles is going to take place right across North America. And batteries are big, heavy things. And so you’re generally going to want to produce them fairly close to the place that you’re going to manufacture them. We certainly intend to be here in Canada manufacturing for a long time. Got some very interesting investments that are taking place in the industry right now, not just General Motors. We happen to have one at our Kamei facility, which is sort of Tripoli. Interesting. I think, first of all, it’s a technology or a new vehicle called Bright Drop. So this is a cargo van and it’ll be a fully electric cargo van. When we did the innovation work on that, we actually tested this in Toronto with FedEx. And what they found is that it helped them cut their delivery time by 20 percent or more. So bright drop is a new technology for us. It’s going to be made in Canada. And I would think over time, as we make more and more battery electric vehicles, that we’re going to see more opportunity for battery plants to be here in Canada as well. The main thing is to think through the supply chain and think about the pieces that you’re missing, because a lot of us in the Klondyke kind of go right to I want to have the factory and the jobs, but we need to think through as well, not just the mining, but the mineral processing. Then we need the intellectual property to be able to develop the chemistry and put the cells together, or else we’re going to be dependent on Asian countries. It’s all that development that happens up front that we need to think through and understand and then pick our niches. What would be the niches that you think Canada could excel most? If you think of how many years we have been experts at mining, you think of, for instance, the technology center at McMaster on Minerals. You think of some of the expertize that Hydro-Quebec has developed in terms of the aluminum industry and using low GHG, low cost electricity to process iron ore to turn it into aluminum. So mineral processing is nothing new to us. We just should be doing more of it.
[00:36:07] People may listen to what you’ve said, which all makes sense and say, OK, that sounds like our opportunity is going to be at the the front end of the supply chain, more at the the raw materials and the processing and less at the final assembly, plus perhaps the Gigafactory level, if you will. How do we have a shot for those other parts of the supply chain?
[00:36:30] Well, I think we do have a shot and I think they will come. It’s just that like all new technologies, we need to make sure that we have the right intellectual property and the right development of intellectual property to be able to get there. And so we really need to continue to double down on our Canadian universities and our Canadian research and development capability. We need to see Canadians own their intellectual property and be able to develop companies that can be part of this incredible Klondyke of supply chain that’s going forward.
[00:37:04] You’ve mentioned IP a couple of times and I don’t want to take too much of a detour down that down that road. But but it but it’s critical. Yes. We need to spend more on basic research. And in the areas that you mentioned, we had your old friend, Jim Balsillie on an earlier episode of disruptors, and you’re well familiar with his passionate point of view on IP.
[00:37:27] I wonder what you think we need to do apart from being more ambitious in that space on patenting and owning our patents, what are the one or two things we could do as a country to get better game on IP as we take on this this rapidly emerging sector?
[00:37:44] Not surprisingly, I agree with Jim worked with Jim for a number of years and learned an immense amount from him and the intangibles. Economy is going to be the determinant of future wealth on our planet. You need to not just have intellectual property. You need to have an intellectual. Property strategy, it’s more a mindset of being able to own your ideas and not sell out your company when you get to 100 million dollars. Let’s keep going so that we get more companies that are Canadian domestic, they own their intellectual property, and then they grow to be 20 billion dollar companies like BlackBerry. So, you know, there are a limited number of international OEMs that are going to be making millions of vehicles per year. If you develop whatever your widget is and it goes into over a million vehicles a year, you’re probably talking about real success. We need to invent the ideas here so we know how close to a thousand people working at General Motors in our software and engineering facilities in Oshawa and in Markham. And we have some very cool things, like a new test track that we just put on the property at Ossur, where it’s a place to put code on the road. It’s a test track for software.
[00:38:57] We’ve been talking a lot about widgets, which is probably what people think about when they think about cars. But GM is, too, to your point, becoming more of an intangible company. You’re creating ideas. I love that expression code to the road and the test track that you’re developing in Oshawa, what’s the goal there?
[00:39:16] Well, because we now have such a production line of technology development, we would need to put that in a physical vehicle to make sure it’s going to work and integrate properly with all the other things that go on in a vehicle. So normally we would have to take those vehicles at a development stage down to our proving grounds and our test tracks in the United States. It would cost time and it would be inefficient. And we’re now of a critical mass in General Motors, Canada, that having our own test track here, we can use it. Twenty seven. We also have a huge cold weather testing facility in Wisconsin where we just had a virtual tour for people to to see what it’s like to test out an electric vehicle when it’s thirty one degrees below zero in the morning. And it still worked to the start. It certainly did.
[00:40:03] David, as we move towards close, I want to get your perspective and maybe GM’s perspective again on Canada’s competitiveness opportunities, as well as challenges we had from propulsion Quebec back on the first part of the show, making a very passionate argument for what Quebec is doing in the propulsion space, not just with vehicles, but with anything that moves. They want to electrify the power that that moves us capex doing some interesting things. Ontario’s got got some interesting, interesting things on the go as well. But it’s a competitive landscape. US states are all over this with their advantages as well.
[00:40:45] What are the big questions you think we as Canadians need to come to grips with as we get deeper into this very exciting space, but also disruptive space?
[00:40:55] Yeah, I mean, I think we need to figure out how we’re going to incentivize consumers to make the switch to electric vehicles over the next decade, because I don’t think we can take that for granted. In all our research, we found that once people buy an electric vehicle, they don’t want anything but for the rest of their lives, they love it. But like anything that’s new, we’re going to need to create incentives. We had some fun in a Super Bowl ad with this recently with Will Ferrell pointing out that Norway has a fifty percent electric vehicle sales rate or more, and they do some very strategic, smart policy things to make sure that people buy electric vehicles. And so it’s things like, can you imagine if because you’re going to buy an electric vehicle, you get a free ride on the ETR for seven or you got free parking when you go downtown or you didn’t have to pay for your license renewal. So I think we can be a lot more effective from a policy point of view, from an economic point of view, I think we should not forget that the auto industry is much, much more than just putting the pieces together. It’s actually inventing the future and then make sure that you own it in Canada as best you can and get your domestic companies to step forward and and see that they don’t need to just serve the Canadian market. They can serve a global market.
[00:42:10] That’s a great view of the enormous opportunity. David, before I let you go, one last question about that. Will Ferrell and Country of Lucius, great, great line. And those of us of a certain age will remember Will Ferrell and kicking and screaming, mocking the coffee shop lady about her electric bill. I thought, how far how far we’ve come. Just give us a quick sense. Where did that I come from? What did what what inspired?
[00:42:38] Well, I think it comes from a spirit of, you know, a company, General Motors, that’s been pretty conservative for a long period of time. But we’re making one of the biggest changes that is imaginable. And when we make that change, when we say that we’re going all electric, people tend to stand up and notice that, you know, I think that’s poking a little fun at our. Pointing out that we’ve got to really be all in on this stuff and we are we’re totally all in on this and somehow, you know, when you make a proclamation like we have some changes in your organization and in the way you look at problems, you’re not being held back by the past. And, boy, is it fun. It’s exciting. And so, you know, if you pick your North Star and you make some real targets and you have the confidence that you’re going to solve the problems and we do, you can change the world with a great message while kicking and screaming or otherwise.
[00:43:31] It’s great to see so many people on this journey to the battery. Klondyke.
[00:43:38] My guest has been David Paterson, the VP of corporate and environmental affairs at GM Canada. David, thanks for riding shotgun with me on disruptors. Great seeing. John, thanks so much. I’d also like to thank Constantine Almatov, the CEO of G.E. Batteries, and Sarah ued the CEO of Propulsion Quebec, who joined me for part one of this episode. I’m John Stackhouse and this is Disruptors and RBK podcast. I hope you’ll listen again next time for the first half of our special series on creativity. In the meantime, I’d encourage you to catch up on any past episodes, including that conversation with Jim Balsillie on your favorite podcast platform. Talk to you soon.
[00:44:25] Disruptors and RBC podcast is created by the RBC Thought Leadership Group and does not constitute a recommendation for any organization, product or service, it’s produced and recorded by Jar Audio for more disruptors, content like or subscribe wherever you get your podcasts and visit RBC Dotcom Slash Disrupters.
Naomi Powell is responsible for developing the narratives driving the team’s economics and thought leadership reports. Prior to joining RBC, she worked as a business journalist in Canada and Europe, most recently reporting on international trade and economics for the Financial Post.
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