Canada-U.S. update: New auto strategy announced

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So last week, the government of Canada announced a new electric vehicle

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strategy. There's a couple of important things there to keep in

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mind if you're a consumer. The first is there will be a $5,000 credit

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for electric vehicle purchases that was scrapped for 2025

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but has been brought back for this year.

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So it's an incentive to buy an electric vehicle.

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There was also a prior mandate that would have forced automakers to

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sell a certain proportion of electric vehicles in Canada that went up to.

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100% EVs by 2035, along with a certain

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minimum by 26 in 2030, that's being removed

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and has been replaced with an emissions target by 20 35,

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which will give the automakers more flexibility in terms of what type of cars

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they can offer into the Canadian market.

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So that should be positive for overall affordability for vehicle buyers.

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So if we think about Canada's auto sector, There's around 125,000

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jobs with just under 40,000 of those jobs in assembly.

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Those jobs have a multiplier effect and create lots of other jobs in

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the economy. So you could say around half a million jobs rely on

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Canada's auto sector, which is about two and a half percent of total

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employment. So it is a very important sector, especially in Southern Ontario.

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What we're trying to protect really is the assembly jobs because parts

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makers in Canada, actually sell most of their parts to assembly

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plants in the U.S. And those are currently protected under the U S M C

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A agreement. The assembly job is where we've seen a lot of risk.

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If 10 years ago, Canada produced over two million vehicles a year.

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Now we're just over a million.

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And if you look at recent announcements by automakers, that could fall further

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as they've been redirecting some of their production into U.

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S facilities to avoid the finished vehicle tariffs in the US.

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So, the Canadian government announcements around...

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Duties on vehicles imported into Canada and reductions

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to those duties if you make your vehicles in Canada, as well as some

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strategic MOUs with Korea and China are meant to

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protect existing assembly jobs in Canada and also try to incent

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new electric vehicle assembly into Canada.

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There's obviously some significant geopolitical considerations when

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you start to talk about a Chinese assembly plant in Canada.

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But this seems to be the path the government's going down now,

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which potentially could be a bargaining chip as we enter into the USMCA

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review in the middle of this year.

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I would say this is a positive announcement.

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It shows the government using industrial policy to

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try to protect jobs in Canada and moving back

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from more draconian measures such as.

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The EV mandate that would have prevented internal combustion vehicles

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from being sold in the Canadian market into a more flexible

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policy that provides companies with more ability to

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meet the targets. So it's a more realistic and achievable policy.