Canada Plans To Become Leading Manufacturer Of Specialised Chips For EV Batteries

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Back in 2020, Canada set a goal to develop an electric vehicle battery ecosystem, which is steadily becoming a reality. The country’s very first battery and cathode manufacturing plants are under construction and were allocated $3.8 billion from the national critical minerals strategy budget. 

With increased demand for electric vehicles in Canada, the need for lithium to make special EV batteries has increased in the last few years. Canada has an abundance of battery metals, which can be used as an advantage in becoming the leading manufacturer of specialised chips for EV batteries. Currently, Australia is the world’s largest lithium producer. While François-Philippe Champagne, Canadian Industry Minister is confident Canada will take over, Patricia Mohr, former vice-president of economics at Scotiabank, Canada feels there’s still time for that to happen. 

Based on Mohr’s analysis, Canada will become a major supplier of critical minerals in the second half of this decade. 

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Impact of the US new Inflation Reduction Act

On the other hand, several believe that the newly introduced Inflation Reduction Act in the US will boost Canadian mining efforts. The act allocates tax credits for electric vehicles that were either sourced for or assembled in North America. 

Simultaneously, demand for electric vehicles in Canada has grown by 46 percent this year, compared to just 11 percent in 2021. Another issue that Minister Champagne highlighted during his interview was the auto industry chip shortage. New cars need specialised chips that control everything in the car from the navigation panel to the headlights. Champagne believes that Canada can become the leading supplier of chips. We’re still facing a global shortage due to reduced chip production during initial days of the lockdown. 

Mike Greenley, CEO of MDA Ltd, a company that builds space equipment for Canadarm, has a strategy in place to tackle the shortage. His company will break their contracts into smaller chunks to manage costs and supply chain schedules. 

Some unfortunate news about Canada’s EV Readiness Index

Canada dropped to the 13th place from 8th in 2021 in the newly updated EV Readiness Index. It assesses the supply, demand, and policies for EVs for 14 nations and Canada’s currently in the second-last position. While Canada allocated a record amount towards the country’s first battery and cathode manufacturing plants, other countries have been more proactive in decarbonising the roads. EV companies including Tesla, Stromvolt Americas, and LG are building factories in Canada but local production plans, infrastructure, and consumer demand due to lack of charging stations on travelling routes has dulled the spark.

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