Automotive News Canada - May 2021 - 17

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The new federal luxury
tax could soon extend to
heavy-duty pickups that don't
typically fall into the luxury
category. The tax could also
make zero-emission vehicles,
such as the Tesla Model X,
below, a more
elusive purchase for
consumers.

PHOTOS:
GENERAL MOTORS
AND TESLA

green light
to the auto industry

Billions in clean-tech
incentives send 'powerful
signals' to auto sector
By ROBERT BOSTELAAR
O T TAWA C O R R E S P O N D E N T

haul it. That's not really a luxury
situation. "
Buyers of the Cadillac
Escalade SUV, which typically
sells for about $120,000, will also
face the tax although, " It's not
going to be cost-prohibitive for
them, " McKeen said.
Policaro said all dealers -
including those who sell vehicles
under the $100,000 threshold -
should be contacting their members of Parliament to protest the
tax. He noted that with inflation,
a well-appointed vehicle that is
$85,000 today could easily reach
the luxury threshold in a few
years and be subject to the tax.
Because the tax disproportionately affects imported cars, it
might run afoul of international
trade deals, said industry stakeholders.
" The challenge with the luxury
tax is that for all intents and purposes, it impacts essentially the
European manufacturer base that
has luxury vehicles, " said David
Adams, president of the Global
Automakers of
Canada, which
represents import
brands.
" It doesn't
Policaro:
make a lot of
Buyers will
sense in terms
likely opt for of the relationlower-priced
ship we're trying
vehicles to
to construct with
beat paying
Europe " through
more tax.
trade agreements.
FILE PHOTO
The government plans to bring forward a
separate bill for the tax, " so there
will be more opportunity to comment. "
The CADA said Ottawa proceeded with the measure " despite
intense lobbying by the embassies of Germany, the U.K. and the
European Union, whose vehicle
manufactures will be the hardest
hit by this tax. "
The association has pledged to
continue the fight against the tax
and is working closely with the
manufacturers' associations and
trade officials from affected countries. - ANC
- With files from Robert Bostelaar

over seven years, including $5 billion
earmarked for the Net Zero Accelerator,
meant to help Canada honour Prime
Minister Justin Trudeau's pledge to cut
greenhouse-gas emissions
by 40 per cent to 45 per
cent over 2005 levels by
2030.
Other sectors, from
agriculture to life sciences, will also be jostling
for a share. But in a budget peppered with referKingston:
ences to EVs, hydrogen
Canada has
fuel cells and charging
a " huge
stations, transportation
clearly starts in the front opportunity "
to become
row.
a secure
" We know other juris- supplier of
dictions compete aggresbatterysively for new investrelated
ment, " Kingston said.
minerals to
" Having the ability to
the United
advertise to manufactur- States.
ers that there is a proFILE PHOTO
gram here ... is so important. "

CANADA IS BETTING BIG ON A
green recovery for an economy ravaged
by the COVID-19 pandemic - and it
wants the auto sector to lead the way.
From tax breaks and cash for the production of zero-emission
vehicles to a resource
strategy that could foster a domestic battery
industry, the federal budget delivered by Finance
Minister Chrystia
Freeland in April rolled
out billions in clean-technology incentives aimed Freeland:
Delivered
at transportation.
The goals? Achieving billions in
budget to
new, even more ambiboost clean
tious targets for greentech.
house-gas reductions and P H O T O :
trumpeting Canada's
BLOOMBERG
desire for a big role in a
transforming car industry.
Or as David Adams,
president of the Global
Automakers of Canada,
put it: " Raising a flag
and waving to the world
that we're serious about
Adams:
this. " His organization
Key budget
lobbies for the interests
provisions
of import automakers.
are those
If the budget didn't
designed
check off every item on
to improve
the sector's wish list -
transporthere was no sweetentation
ing of federal rebates
routes,
for electric vehicles or a expedite
scrappage program - it border
still earned quick praise crossings
for measures to spur
and strip
investment that industry away red
leaders saw as a broad
tape.
recognition of the secFILE PHOTO
tor's importance.
" They're definitely powerful signals, "
said Brian Kingston of the Canadian
Vehicle Manufacturers' Association,
which lobbies on behalf of the Detroit
Three automakers.
Added Adams: " I think there's obviously things in there to attract the type of
investment that they're looking for, especially in our industry. "
Provisions the industry says will have
the most impact are:

Corporate tax rates fall by half - to
7.5 per cent for big businesses, 4.5 for
small - through 2029 for companies that
make or process zero-emission technologies. The cut creates " exciting opportunities " for firms expanding into green tech,
said Linda Hasenfratz, chief executive of
Guelph, Ont.-based global parts maker
Linamar Corp.
At the end of March,
nearly half of Linamar's
new business involved
electric vehicles,
Hasenfratz said.
" We're winning a ton
of [zero-emissions] business, and so are other
Hasenfratz:
suppliers in the sector.
Lower
I think it's great. "
corporate
Linamar is stepping
up its green expansion in tax rates
help create
Canada with a recently
announced alliance with " exciting
Vancouver-based Ballard opportunities " for
Power Systems to build
companies
hydrogen fuel-cell-elecexpanding
tric powertrains for
heavy trucks. Still in the into green
tech.
early stages, the project
FILE PHOTO
envisions Ballard supplying fuel cell subsystems and Linamar
providing the rolling chassis and final
assembly.
In the United States, Linamar is working with Ballard and Roush CleanTech to
build fuel cell vans that UPS will test in
California.

MORE MONEY TO REDUCE EMISSIONS

FROM MINERALS TO BATTERIES

Without a subsidy pot, governments
have little hope of luring major private
projects. Canada's pot is the Strategic
Innovation Fund, already used to attract
high-profile investments such as Ford
Motor Co.'s plan to convert its Oakville,
Ont., plant to electric-vehicle production.
Now that fund gets a $7.2-billion boost

LOWER TAXES FOR GREEN PROJECTS

Canada has rich stores of the minerals essential to the production of batteries
that will power an electric world. To best
use them, the government directed $46
million to coordinate policy and advance
expertise in mining and refining.
Kingston thinks Canada has a " huge
opportunity " to become a secure suppli-

PHOTO: PORSCHE

er to the United States, its partner in a
newly signed action plan on critical minerals.
Peter Hatges, an automotive analyst
with KPMG Canada, said the country has
the resources and know-how - especially
in Quebec, a leader in lithium-ion development - to be " a force " in battery production.

STANDARDIZED CHARGING STATIONS
In a bid to make EV charging stations as easy to use - and trust - as
gas pumps, the budget
provides $56 million to
develop codes and standards for retail electricity and hydrogen-fuel
vendors. The work will
be coordinated with the
United States and other
countries.
Hatges: With
Auto officials called
its resources
the measures a weland
come step in building
expertise,
consumer confidence
Canada can
in alternative fuels. But
be " a force "
with automakers planin battery
ning to launch as many
production.
as 130 new models by
PHOTO:
2023, some questioned
LINKEDIN
whether the federal government should also be adding to the
$376 million already spent on setting up
charging stations.
Subsidies for home charging ports
would help spur EV sales and lower
emissions, Hatges said.
" My position has always been that
the government's best dollars spent are
incentives toward the development of
electric infrastructure. "
The budget also confirmed the establishment of a $1.5-billion Clean Fuels
Fund, announced in December, to support the production and distribution
of low-carbon and zero-emission fuels
including hydrogen and biomass. The
fund is meant to position Canada as a
leader in hydrogen technologies.

SPEEDING THE FLOW OF TRADE
For Adams, measures to improve
transportation routes in Canada, speed
border crossings and remove red-tape
roadblocks were the most significant
budget news.
The government will inject $1.9 billion
over four years into the National Trade
Corridors Fund to improve roads, rail
lines and shipping routes. Contributions
from other government levels and the
private sector could bring total spending
to $4.6 billion, budget documents predict.
At the U.S. border, $656 million will
be spent on modernization to reduce
delays. In a pilot project, three crossings
will get pre-clearance systems that allow
customs and immigration inspections to
be completed before goods and travelers
enter Canada.
Creating a " more expeditious border crossing " to speed the flow of parts
between the United States and Canada
should benefit automakers and all manufacturers, Adams said. - ANC

Automotive News Canada - May 2021

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