The United States has imposed an 100-per-cent tariff wall against the leader in EV development, China. Canada has been under pressure to do the same.STRINGER/GERMANY
Roger Boyd is a fellow at the Balsillie School of International Affairs specializing in research on the interactions between climate change and geopolitics.
Before the Berlin Wall came down, many East Germans were proud of their Trabant cars. But as soon as the wall came down and they could see brands such as Volkswagens, Mercedes, BMWs, they suddenly saw how backward those Trabants were.
The United States has now constructed its own electric vehicle version of the Berlin Wall, a 100-per-cent tariff wall against the leader in EV development – China that has utilized a mixture of government support and brutal domestic competition to produce a world-beating EV industry.
Canada has been under pressure to do the same. Ottawa has launched consultations on the matter, and a decision could come any day now. It would be a mistake if Canada follows the United States in imposing punitive tariffs.
To gain real traction for the adoption of EVs in Canada, we need more competition and lower prices, something the Chinese manufacturers can provide. Even with the current Canadian 6-per-cent car-import tariff plus transport and other costs, Chinese EVs could compete on the level of internal combustion engines-only vehicles. If it is okay for Tesla to supply Canada from its Shanghai plant, why should it not be okay for BYD to supply Canada from its Chinese plants, or even from its Mexican plant which sits within the free-trade area created by the Canada-United States-Mexico Agreement?
The U.S. and Europe are attempting to protect their car manufacturers from their own mistakes, such as repeatedly doubling down on ICE vehicles and the wrong future bet of hydrogen (the Betamax of future vehicle technology). Also, with respect to the European manufacturers, cheating on diesel emissions tests and significant collusion against the interests of consumers.
Even Tesla squandered its first-mover advantage and is now struggling in the Chinese market. In 2001, General Motors threw away the lead that it had with the EV1, after using its political muscle to get California’s electric car mandate removed. In the case of the “big three” U.S. manufacturers of GM, Ford and Chrysler (the latter now owned by Stellantis) their focus has become selling bigger and more expensive trucks and SUVs, while returning tens of billions of dollars to their shareholders rather than investing in the future – the exact opposite of the Chinese manufacturers.
Some argue that China has “unfairly” supported its EV industry, but Canada has a very long history of giving government money to U.S. car companies, through bailouts (for example, the 2009 bailout of $13.7-billion to GM and Chrysler), subsidies, grants, incentives and loans. In return Canada has received little real benefit, with a dwindling Canadian work force for the big three.
Both the U.S. and Europe have repeatedly rescued, subsidized and protected their car manufacturers, and Tesla has benefitted from overflowing U.S. government largesse through cheap loans, purchase and production subsidies and now the new EV Berlin Wall. The hypocritical Europeans also allowed extensive collusion between their car makers which represented a massive hidden subsidy paid by consumers.
The electrification of the transport system is a central element of the fight against anthropogenic climate change, so it is also hard to understand why the Canadian government would be considering removing the option of greater competition that would both benefit Canadian consumers, and help drive the move away from oil consumption in the transport sector.
Not following the U.S. into the construction of an EV version of the Berlin Wall is in Canada’s national interest, by providing Canadians with access to vehicles from the leading EV manufacturing nation (which would be expected to drive better prices and innovation from other suppliers). It is not the responsibility of Canadian consumers to subsidize U.S. car company profits.
The Canadian government must do what is in the interests of Canadians and withstand any U.S. pressure to implement a self-harming tariff wall against Chinese EVs, and therefore not become the land of the EV equivalent of the Trabant. Instead, perhaps it should be negotiating with the likes of BYD for a Canadian EV plant and the world leader CATL for a battery plant, while pointing out the self-harming nature of the EV Berlin Wall to our American neighbours.