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Automotive

Electric vehicles facing uphill climb

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8 minute read

From Resource Works

Ford shifts from EVs to gasoline trucks in Oakville due to declining demand and financial losses, challenging government EV targets.

In October 2020, the federal and Ontario governments announced with fanfare that they would each pour $295 million into helping Ford upgrade its assembly plant in Oakville to start making electric vehicles.

“The upgrade of the Ford plant will make Oakville into the company’s No 1. electric vehicle factory in North America,” we were told.

And Prime Minister Trudeau declared: “This is a win-win. . . . helping accelerate our transition to a low-carbon, clean-growth economy, which will help protect our environment, drive innovation, and create many good middle-class jobs.”

In April 2023, Ford announced it will spend $1.8 billion to retool its Oakville Assembly Complex, beginning in mid-2024, to build next-generation passenger electric vehicles in 2025.

Then the target date of 2025 becomes 2027.

And now, in July 2024, reality strikes: Ford confirmed that the Oakville plant would no longer produce electric three-row SUVs but would instead turn out larger, gasoline-powered versions of its flagship F-Series pickup truck.

The reason: a global slowdown in electric vehicle demand, with hesitant customers delaying plans to buy EVs, and many opting instead for hybrid-electric vehicles.

Ford, for one, said it will step up hybrid offerings and that by 2030 it expects to offer hybrid powertrains across its lineup of gas-powered vehicles. Ford has also delayed production of electric pickup trucks in Tennessee.

Ford now says its electric vehicle unit lost $1.3 billion USD in the first quarter alone. It sold 10,000 vehicles in that period, and thus lost about $132,000 US for every EV it sold.

General Motors also announced it would cut production of EVs, citing slowing demand.

As far as we know, Honda Canada is proceeding with a $15 billion plan to create Canada’s first comprehensive electric-vehicle supply chain, comprising four plants in Ontario. It includes Honda’s first EV assembly plant in Alliston, ON, which Honda said will produce up to 240,000 vehicles per year.

Flavio Volpe, president of the Automotive Parts Manufacturers Association, said the Ford decision is “not good news,” and he fears there will be similar announcements from other car companies.

And automotive industry analyst Robert Karwel says: “I would definitely not be surprised to see announcements from other companies.”

“People are getting payment fatigue right now generally, and EVs are more expensive,” said Karwel, a senior manager of J.D. Power’s Power Information Network. “The average car payment hit $900 a month in January.”

In the first quarter of this year, 46,744 light and medium-duty EVs were registered across Canada, 11.2% of the market share.

B.C. has long led Canada in the uptake of electric vehicles, and in May they made up 10.7% of light-duty vehicle sales.

But another factor weighing on consumers is B.C.’s recent reduction in rebates for electric vehicles.

B.C. reduced rebates to $3,000 for battery, fuel-cell and longer-range plug-in hybrid electric vehicles and $1,500 for shorter-range plug-in hybrid electric vehicles. The previous incentives ranged from $2,500 to $6,000, depending on the kind of car.

And now, only vehicles sold for under $55,000 qualify for the rebates. Previously, the maximum price was $77,000 to qualify. The federal rebate of $5,000 for qualifying vehicles, introduced on May 1, is still available.

If the slowdown in demand continues, it will only help power producers such as B.C. Hydro, which face staggering demand for power, for EVs and for industrial and clean-energy use.

The federal government requires at least 20% of new vehicles sold in Canada to be zero-emission vehicles (ZEVs) by 2026, at least 60% by 2030, and 100% by 2035. (ZEVs include battery electric vehicles and plug-in hybrid electric vehicles.)

Prime Minister Trudeau: “As a great Canadian once said, that is where the puck is going and that is where we’re going to be.”

B.C. is even more ambitious: It has set targets requiring 90% of all light-duty new vehicle sales to be zero-emission by 2030 and 100% by 2035.

That means B.C. needs substantially more power to cope with EVs — and will require even more than that to handle expected population growth and the province’s plans to electrify BC’s economy and push clean energy.

Now the Energy Futures Institute (EFI) calls in a new report for “a dramatic increase in domestic electricity production” in B.C., and cancellation of current plans to wind down some existing power-generation facilities.

EFI chair Barry Penner: “After years without new generation coming online, the long-awaited Site C dam is expected to start producing power by next year. Even if Site C was available last year or this year, it wouldn’t be enough to avoid having to import electricity from the United States and Alberta to keep our lights on.”

As for the federal target, the Public Policy Forum says Canada must build more electricity generation in the next 25 years than it has over the last century in order to support a net-zero emissions economy by 2050.

All in all, Canada’s electric vehicle transition could cost more than $300 billion by 2040 as the installation of charging infrastructure expands, upgrades to the electrical grid are made, and other changes take place, according to a report  released by Natural Resources Canada.

Among other things, it says Canada needs to add 40,000 public charging ports per year on average between now and 2040. There now are around 32,000 public ports across the country, and roughly 11,000 were installed in 2023.

The Canadian Vehicle Manufacturers’ Association says lack of charging infrastructure is already deterring some would-be EV buyers. A lack of charging station availability was cited as a top concern by 72% of consumers, according to an Autotrader Canada survey conducted in March.

  1. Cornelius van Kooten, an economics professor and Canada Research Chair in Environmental Studies and Climate Change at the University of Victoria, said the federal timeline for electric vehicles “isn’t realistic or feasible.”

In a study for the free-enterprise Fraser Institute, he said that to meet the goal, Canada would need the equivalent of 10 big new hydro dams (or 13 large natural-gas power plants).

Quebec, for one, has already had to start limiting industrial expansion because it can’t fill all the power needs.

So you can but sigh when you hear of Quebec’s latest plan for electric vehicles: it is moving ahead with regulations that not only mandate EV sales but actually prohibit sales of any internal combustion engines — including plug-in hybrids, from January 1, 2035.

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Automotive

Canadians’ Interest in Buying an EV Falls for Third Year in a Row

Published on

From Energy Now

Electric vehicle prices fell 7.8 per cent in the last quarter of 2024 year-over-year, according to the AutoTader price index

Fewer Canadians are considering buying an electric vehicle, marking the third year in a row interest has dropped despite lower EV prices, a survey from AutoTrader shows.

Forty-two per cent of survey respondents say they’re considering an EV as their next vehicle, down from 46 per cent last year. In 2022, 68 per cent said they would consider buying an EV.

Meanwhile, 29 per cent of respondents say they would exclusively consider buying an EV — a significant drop from 40 per cent last year.

The report, which surveyed 1,801 people on the AutoTrader website, shows drivers are concerned about reduced government incentives, a lack of infrastructure and long-term costs despite falling prices.

Electric vehicle prices fell 7.8 per cent in the last quarter of 2024 year-over-year, according to the AutoTader price index.

The survey, conducted between Feb. 13 and March 12, shows 68 per cent of non-EV owners say government incentives could influence their decision, while a little over half say incentives increase their confidence in buying an EV.

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Automotive

Hyundai moves SUV production to U.S.

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MXM logo MxM News

Quick Hit:

Hyundai is responding swiftly to 47th President Donald Trump’s newly implemented auto tariffs by shifting key vehicle production from Mexico to the U.S. The automaker, heavily reliant on the American market, has formed a specialized task force and committed billions to American manufacturing, highlighting how Trump’s America First economic policies are already impacting global business decisions.

Key Details:

  • Hyundai has created a tariffs task force and is relocating Tucson SUV production from Mexico to Alabama.

  • Despite a 25% tariff on car imports that began April 3, Hyundai reported a 2% gain in Q1 operating profit and maintained earnings guidance.

  • Hyundai and Kia derive one-third of their global sales from the U.S., where two-thirds of their vehicles are imported.

Diving Deeper:

In a direct response to President Trump’s decisive new tariffs on imported automobiles, Hyundai announced Thursday it has mobilized a specialized task force to mitigate the financial impact of the new trade policy and confirmed production shifts of one of its top-selling models to the United States. The move underscores the gravity of the new 25% import tax and the economic leverage wielded by a White House that is now unambiguously prioritizing American industry.

Starting with its popular Tucson SUV, Hyundai is transitioning some manufacturing from Mexico to its Alabama facility. Additional consideration is being given to relocating production away from Seoul for other U.S.-bound vehicles, signaling that the company is bracing for the long-term implications of Trump’s tariffs.

This move comes as the 25% import tax on vehicles went into effect April 3, with a matching tariff on auto parts scheduled to hit May 3. Hyundai, which generates a full third of its global revenue from American consumers, knows it can’t afford to delay action. Notably, U.S. retail sales for Hyundai jumped 11% last quarter, as car buyers rushed to purchase vehicles before prices inevitably climb due to the tariff.

Despite the trade policy, Hyundai reported a 2% uptick in first-quarter operating profit and reaffirmed its earnings projections, indicating confidence in its ability to adapt. Yet the company isn’t taking chances. Ahead of the tariffs, Hyundai stockpiled over three months of inventory in U.S. markets, hoping to blunt the initial shock of the increased import costs.

In a significant show of good faith and commitment to U.S. manufacturing, Hyundai last month pledged a massive $21 billion investment into its new Georgia plant. That announcement was made during a visit to the White House, just days before President Trump unveiled the auto tariff policy — a strategic alignment with a pro-growth, pro-America agenda.

Still, the challenges are substantial. The global auto industry depends on complex, multi-country supply chains, and analysts warn that tariffs will force production costs higher. Hyundai is holding the line on pricing for now, promising to keep current model prices stable through June 2. After that, however, price adjustments are on the table, potentially passing the burden to consumers.

South Korea, which remains one of the largest exporters of automobiles to the U.S., is not standing idle. A South Korean delegation is scheduled to meet with U.S. trade officials in Washington Thursday, marking the start of negotiations that could redefine the two nations’ trade dynamics.

President Trump’s actions represent a sharp pivot from the era of global corporatism that defined trade under the Obama-Biden administration. Hyundai’s swift response proves that when the U.S. government puts its market power to work, foreign companies will move mountains — or at least entire assembly lines — to stay in the game.

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