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“This discriminatory action” could be the “death knell” of the Canadian auto industry. So says Flavio Volpe, and he should know, since he’s the president of the Auto Parts Manufacturers’ Association of Canada, the organization tasked with, amongst other things, enticing automakers and their associated suppliers to build their production plants here in the Great White North.

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And if he says something could adversely affect the Canadian auto manufacturing business — which employs some 135,000 Canadians directly and another 400,000 in related industries — we should all be concerned.

The discriminatory action in question is the United States’ proposed Build Back Better program, a surprisingly protectionist policy (only slightly) disguised as pandemic relief. More specifically, its incentive programs so completely favour American-built BEVs that it would almost completely shut down all Canadian exports of electric vehicles. Indeed, electric vehicles built in any country other than the U.S. would be so disadvantaged that automobile exports — at least moderately priced models powered by batteries — to the United States would virtually stop.

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Too extreme a prognostication for you? Well, here’s how the program is supposed to work. Decide for yourself how it will affect the Canadian manufacturing industry.

If passed, Build Back Better would, according to Daniel Breton, president and CEO of Electric Mobility Canada, “expand and modify the tax credit programs that encourage consumers to purchase electric vehicles. The proposed new consumer incentives would fully replace the current maximum refundable tax credit system” by:
• retaining the current US$7,500 incentive for the next five years;
• supplementing it with an additional US$4,500 for EVs with final assembly by unionized workers in the United States; and
• adding an additional US$500 rebate for vehicles with 50 per cent of their battery components (including battery cells) made in the U.S.

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From 2022 to 2027, this means anyone buying a battery-powered EV would receive at least US$7,500 — and as much as US$12,500, if the battery and car are built in the U.S.