Automotive
Federal government should face facts—the EV transition is failing
From the Fraser Institute
” public charging infrastructure isn’t keeping pace with predicted consumer adoption of EVs, and as noted in a recent study published by the Fraser Institute, targets for consumer adoption of EVs are out of sync with historical timelines for the development of metals needed to make them “
A series of recent headlines in the Wall Street Journal reveal the extent to which government plans in Canada and the United States, to transition surface transportation from internal combustion to battery-electric power, are already showing signs of failure. “Ford Cuts Lightning Output in Latest Sign of EV Downshift,” reads one article while the editorial page says “The EV Backlash Builds: Companies cut output amid flagging demand” and “The Electric Vehicle Push Runs Out of Power.”
And there’s evidence the electric vehicle (EV) transition is also stalling in other countries. In Germany, EV sales are in freefall as the cash-strapped government tapers off subsidies for EVs. Battery EV registrations dropped 29 per cent from the previous year while plug-in hybrid registrations dropped 35 per cent year-over-year.
Manufacturers are also pulling back from the EV market. Recently, only a year after announcing a US$5 billion joint venture between GM and Honda to develop affordable EVs, the two auto giants pulled the plug on the venture. Even in China, which planned to be the world’s dominant supplier of EVs and batteries, is finding the transition hard to sustain. As Bloomberg reports, “China’s Abandoned, Obsolete Electric Cars Are Piling Up in Cities.” The subhead of the article explains, “A subsidy-fueled boom helped build China into an electric-car giant but left weed-infested lots across the nation brimming with unwanted battery-powered vehicles.”
All of this should trouble the Trudeau government, which mandated that all new light-duty vehicles sold in Canada be EVs by 2035 and has poured taxpayer dollars into the predicted future EV and battery production industry. For example, $28 billion for two EV battery plants (Stellantis-LG and Volkswagen), $2.7 billion for a new battery manufacturing plant in Montreal (which will also get $4.6 billion in production incentives with one-third coming from Quebec), and $640 million for a new Ford electric vehicle factory (also in Quebec). Government has made other smaller investments in rare earth mining and refining to incentivize production of the metals needed to make EV batteries. And of course, all this “investment” government comes atop consumer incentives to convince people to buy EVs. The federal government offers incentives up to $5,000 for the purchase of light-duty vehicles, and up to $2,000 for medium-heavy duty vehicles. Seven Canadian provinces offer additional subsidies.
Clearly, the Trudeau government is betting heavily, with the limited resources of Canadian taxpayers, on an EV future that increasingly looks unlikely to happen. Governments around the world are running out of money to subsidize EVs, consumers are increasingly reluctant to buy EVs, public charging infrastructure isn’t keeping pace with predicted consumer adoption of EVs, and as noted in a recent study published by the Fraser Institute, targets for consumer adoption of EVs are out of sync with historical timelines for the development of metals needed to make them, insuring a bottleneck situation in the not-too-distant future.
In fact, to meet international EV adoption pledges, the world would need 50 new lithium mines by 2030, along with 60 new nickel mines and 17 new cobalt mines. The materials needed for cathode production will require 50 more new mines, and another 40 new mines for anode materials. The battery cells will require 90 new mines, and EVs themselves another 81. In total, this adds up to 388 new mines. For context, as of 2021, there were only 270 metal mines operating in the U.S. and only 70 in Canada. And mine development timelines are long—lithium timelines, for example, are approximately six to nine years, while production timelines (from application to production) for nickel are approximately 13 to 18 years.
The writing is on the wall. The Trudeau government should reconsider the reckless gambling with taxpayer money that its EV agenda represents. It should withdraw the “investments” where it can, and reconsider the country’s 2035 all-EV mandate. These all look increasingly like bad bets, with Canadian taxpayers being the ultimate losers.
Author:
From the Fraser Institute
During his victory speech Monday night, Prime Minister Mark Carney repeated one of his favourite campaign slogans and vowed to make Canada a “clean energy superpower.” So, Canadians can expect Ottawa to “invest” more taxpayer money in “clean energy” projects including electric vehicles (EVs), the revolutionary transportation technology that’s been ready to replace internal combustion since 1901 yet still requires government subsidies.
It’s a good time for a little historical review. In 2012 south of the border, the Obama administration poured massive subsidies into companies peddling green tech, only to see a vast swath go belly up including Solyndra, would-be maker of advanced solar panels, which failed so spectacularly CNN called the company the “poster child for well-meaning government policy gone bad.”
One might think that such a spectacular failure might have served as a cautionary tale for today’s politicians. But one would be wrong. Even as the EV transition slammed into stiff headwinds, the Trudeau government and Ontario’s Ford government poured $5 billion in subsidies into Honda to build an EV battery plant and manufacture EVs in Ontario. That “investment” came on top of a long list of other “investments” including $15 billion for Stellantis and LG Energy Solution; $13 billion for Volkswagen (or $16.3 billion, per the Parliamentary Budget Officer), a combined $4.24 billion (federal/Quebec split) to Northvolt, a Swedish battery maker, and a combined $644 million (federal/Quebec split) to Ford Motor Company to build a cathode manufacturing plant in Quebec.
How’s all that working out? Not great.
“Projects announced for Canada’s EV supply chain are in various states of operation, and many remain years away from production,” notes automotive/natural resource reporter Gabriel Friedman, writing in the Financial Post. “Of the four multibillion-dollar battery cell manufacturing plants announced for Canada, only one—a joint venture known as NextStar Energy Inc. between South Korea’s LG Energy Solution Ltd. and European automaker Stellantis NV—progressed into even the construction phase.”
In 2023, Volkswagen said it would invest $7 billion by 2030 to build a battery cell manufacturing complex in St. Thomas, Ontario. However, Friedman notes “construction of the VW plant is not scheduled to begin until this spring [2025] and initial cell production will not begin for years.” Or ever, if Donald Trump’s pledge to end U.S. government support for a broad EV transition comes to pass.
In the meantime, other elements of Canada’s “clean tech” future are also in doubt. In December 2024, Saint-Jérome, Que.-based Lion Electric Co., which had received $100 million in provincial and government support to assemble batteries in Canada for electric school buses and trucks, said it would file for bankruptcy in the United States and creditor protection in Canada. And Ford Motor Company last summer scrapped its planned EV assembly plant in Oakville, Ontario—after $640 million in federal and provincial support.
And of course, there’s Canada’s own poster-child-of-clean-tech-subsidy failure, Northvolt. According to the CBC, the Swedish battery manufacturer, with plans to build a $7 billion factory in Quebec, has declared bankruptcy in Sweden, though Northvolt claims that its North American operations are “solvent.” That’s cold comfort to some Quebec policymakers: “We’re going to be losing hundreds of millions of dollars in a bet that our government in Quebec made on a poorly negotiated investment,” said Parti Québécois MNA Pascal Paradis.
Elections often bring about change. If the Carney government wants to change course and avoid more clean-tech calamities, it should pull the plug on the EV revolution and avoid any more electro-boondoggles.
Kenneth P. Green
Senior Fellow, Fraser Institute
MxM News
Quick Hit:
Major automakers are urging Congress to intervene and halt California’s aggressive plan to eliminate gasoline-only vehicles by 2035. With the Biden-era EPA waiver empowering California and 11 other states to enforce the rule, automakers warn of immediate impacts on vehicle availability and consumer choice. The U.S. House is preparing for a critical vote to determine if California’s sweeping environmental mandates will stand.
Key Details:
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Automakers argue California’s rules will raise prices and limit consumer choices, especially amid high tariffs on auto imports.
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The House is set to vote this week on repealing the EPA waiver that greenlit California’s mandate.
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California’s regulations would require 35% of 2026 model year vehicles to be zero-emission, a figure manufacturers say is unrealistic.
Diving Deeper:
The Alliance for Automotive Innovation, representing industry giants such as General Motors, Toyota, Volkswagen, and Hyundai, issued a letter Monday warning Congress about the looming consequences of California’s radical environmental regulations. The automakers stressed that unless Congress acts swiftly, vehicle shipments across the country could be disrupted within months, forcing car companies to artificially limit sales of traditional vehicles to meet electric vehicle quotas.
California’s Air Resources Board rules have already spread to 11 other states—including New York, Massachusetts, and Oregon—together representing roughly 40% of the entire U.S. auto market. Despite repeated concerns from manufacturers, California officials have doubled down, insisting that their measures are essential for meeting lofty greenhouse gas reduction targets and combating smog. However, even some states like Maryland have recognized the impracticality of California’s timeline, opting to delay compliance.
A major legal hurdle complicates the path forward. The Government Accountability Office ruled in March that the EPA waiver issued under former President Joe Biden cannot be revoked under the Congressional Review Act, which requires only a simple Senate majority. This creates uncertainty over whether Congress can truly roll back California’s authority without more complex legislative action.
The House is also gearing up to tackle other elements of California’s environmental regime, including blocking the state from imposing stricter pollution standards on commercial trucks and halting its low-nitrogen oxide emissions regulations for heavy-duty vehicles. These moves reflect growing concerns that California’s progressive regulatory overreach is threatening national commerce and consumer choice.
Under California’s current rules, the state demands that 35% of light-duty vehicles for the 2026 model year be zero-emission, scaling up rapidly to 68% by 2030. Industry experts widely agree that these targets are disconnected from reality, given the current slow pace of electric vehicle adoption among the broader American public, particularly in rural and lower-income areas.
California first unveiled its plan in 2020, aiming to make at least 80% of new cars electric and the remainder plug-in hybrids by 2035. Now, under President Donald Trump’s leadership, the U.S. Transportation Department is working to undo the aggressive fuel economy regulations imposed during former President Joe Biden’s term, offering a much-needed course correction for an auto industry burdened by regulatory overreach.
As Congress debates, the larger question remains: Will America allow one state’s left-wing environmental ideology to dictate terms for the entire country’s auto industry?
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