Environmental groups are urging the federal government to avoid getting drawn into a trade war with China over electric vehicles.
They say they worry trade sanctions could increase the price of EVs and slow Canada’s transition to a low-carbon economy.
Less than a week after the federal government announced it was considering trade restrictions on cheap Chinese-made EVs, groups such as Environmental Defence are calling on the Canadian government to consider the impact of such measures.
Nate Wallace, clean transportation program manager at Environmental Defence, said the Canadian government should take a balanced approach to applying tariffs on Chinese-made EVs.
He said this approach should protect Canadian auto industry jobs while also allowing competition to drive down the price of electric vehicles.
Wallace said North American automakers are eager to build expensive plug-in cars that only wealthy families can afford.
“To meet our climate goals, we can’t allow EVs to remain a niche luxury market that allows automakers to keep selling gas-guzzling vehicles,” Wallace said.
“I think the danger is… if [tarrifs] “If automakers are able to slow the transition to electric vehicles, the EV industry will be weakened, not strengthened.”
The Canadian auto industry faces many challenges over the next few years. A decade from now, many automakers will need to restructure their supply chains and operations to sell electric vehicles in accordance with new federal mandates that require electric vehicle sales by 2035.
The sector is competing with China, the world’s largest producer of electric vehicles, whose automakers can build cheaper, more technologically advanced vehicles: Industry leader BYD’s cheapest EV, the compact Seagull, sells for about $13,000.
The 2023 Chevy Bolt retails for over $38,000.
The Canadian federal government announced on Monday that it will take steps to raise import prices for electric vehicles from China in a bid to protect the country’s fast-growing electric vehicle market.
Finance Minister Chrystia Freeland has announced a 30-day consultation to look into Beijing’s trade practices, set to begin on July 2.
Freeland said Monday there was a risk that Canada’s EV market would become flooded with cheap Chinese plug-ins.
“Canada’s autoworkers and industry are facing unfair competition from China’s deliberate, state-sponsored overcapacity policies, which are undermining Canada’s EV industry’s ability to compete in domestic and global markets,” she said.
Canada’s largest supplier of EVs is the United States, followed by South Korea. China is a close third with a growing market share. Tesla makes versions of its popular electric vehicles in China and sells them in Canada.
If Canada were to implement protectionist measures, it would be following in the footsteps of the United States and the European Union.
Critics of China’s electric vehicle industry point to its heavy environmental impact and poor labor standards.
“[There’s] “There is no justification for trading high-paying, high-skill jobs for cheap, carbon-intensive cars made in poor conditions,” said Lana Payne, president of Unifor, Canada’s largest private sector union.
Chinese EVs are carbon intensive but still environmentally friendly
Environmental groups acknowledge concerns about the treatment of Chinese workers but say Chinese-made EVs emit less carbon dioxide over their lifecycle than internal combustion engine vehicles.
An analysis conducted in March by research firm BloombergNEF found that EVs generally have lower lifecycle emissions than internal combustion engine vehicles.
The analysis found that even electric vehicles made and operated in China, which has a carbon-intensive power grid, have lower carbon emissions than internal combustion engines.
The study found that cars made in the United States, which has a cleaner power grid, emit fewer greenhouse gases over their lifetime.
For that reason, groups such as Clean Energy Canada, based at Simon Fraser University, say Canada and other countries shouldn’t be so quick to target Chinese-made EVs.
“For people who are worried about choosing an electric vehicle because they think it’s not environmentally advantageous, electric vehicles definitely have an advantage when it comes to reducing emissions,” said Rachel Dolan, vice-president of policy and strategy at Clean Energy Canada.
Clean Electricity Canada said the federal government should look beyond tariffs to ensure North American automakers are competitive.
Dolan said Canada’s zero-emission vehicle incentives could be restructured to offer further discounts to EVs manufactured in low-carbon jurisdictions.
“So a clean car, like one made in Canada, would get more incentive than one made in China, which has a dirtier power grid and higher emissions intensity,” Dolan said.
Canada’s Green Party also criticized China’s move to impose tariffs on electric vehicles and other clean technologies.
“The Biden Administration’s recent decision to impose new tariffs on Chinese products has prompted Canada to consider similar measures,” the party said in a statement.
“But the Greens say trade policy decisions should be driven by climate impacts.”