The electrification of transportation is upon us.
A record two million electric vehicles (EVs) were added to the world’s roads in 2016, according to the Global EV Outlook 2016 by the International Energy Agency (IEA). In Norway, 29 per cent of all new cars sold last year were electric. And China, in the battle against city smog, is the global EV leader with more than 200 million electric two-wheelers and more than 300,000 electric buses.
And this is only the beginning. EVs still only accounted for 0.2 per cent of total passenger light-duty vehicles in circulation in 2016. If estimates are correct and between nine million and 20 million new EVs hit the roads by 2020, and another 40 million to 70 million by 2025, EVs will still fall short of significantly reducing the world’s greenhouse gas emissions.
To limit temperature increases to below two degrees Celsius by the end of the century, the IEA says 600 million EVs are needed by 2040. But here’s the problem: EVs, like other low-carbon technologies, use a number of different exotic metals in their design.
Many of these metals are considered critical to the development of the EV market. Can the supply of these materials keep up to market demand? And what will Canada’s role be in this shift?
Traditionally, Canada’s strength has been its natural resources. So common wisdom sees Canada’s opportunity in supporting the build up of renewable power generation infrastructure and the EV market—the cobalt and lithium for the batteries, the neodymium and dysprosium (both rare earth elements) for the high-powered magnets.
Brendan Marshall, vice-president of economic and northern affairs with the Mining Association of Canada tidily sums it up.
“There is a natural synergy between mining and clean technology,” he says. “Extracted raw materials are transformed into technology that, having gone full circle, assist mining operations in reducing environmental footprints and enhancing efficiency and reliability.”
But is supplying rare earth elements, which actually aren’t rare and can be found on every continent, a good bet?
Jerry Kroll is categorical about what Canada could supply to EV, solar-panel and wind-power producers. “Not much,” says the chief executive officer of Electra Meccanica Vehicles, which currently produces Canada’s only EV. The hand-built sports car company is based in Vancouver, but it has roots in Torino, Italy, that go back to 1959.
Kroll designed the Solo, a one-person EV for the 83 per cent of people who commute to work by themselves, after he and Henry Reisner, president of Intermeccanica and co-founder of Electra Meccanica, toured Tesla’s factory in California in 2013.
The three-wheel commuter has a 160-kilometre range, a 130-kilometre/hour top speed, enough room behind the driver to do the weekly shopping and a less-than-$20,000 price tag.
Right now, only between two and 20 Solos leave the New Westminster, B.C., plant each month. By January, Kroll says production will ramp up to “hundreds per month.”
But Electra Meccanica is squarely focused on the global market, and Kroll says the Solo is already being manufactured in China for the Chinese market. His general manager just arranged the same for the Indian market. In June, the Solo passed U.S. compliance regulations. But in Canada, the compliance process is still under way.
“We’re looking at manufacturing in Mexico and Europe as well,” Kroll says. “If we get the Canadian government to wake up to the fact that the American government helped Tesla with $500 million, we could establish a North American manufacturing facility somewhere in Canada too.”
To fund this expansion, Electra Meccanica expects to be on the OTCQB market in the U.S. within the next month or two.
“We’ll get elevated to the NASDAQ when we get to over $4/share, which should happen in about 15 minutes,” Kroll says with the characteristic self-assurance of an entrepreneur with past successes.
To his point about Canadian opportunities in the unfolding global EV market, Kroll says the materials needed for EVs will be sourced through global supply chains, at least in part based on the proximity of production plants.
“There’s so much of that crap around. It doesn’t make sense to ship it around the world if you can mine it China for Chinese manufacture,” he says.
In fact, China has produced more than 90 per cent of the global rare earth metals in recent years, according to the United States Geological Survey. And while mining companies are staking claims for cobalt (a key ingredient in some EV batteries) in northern Ontario, the Democratic Republic of Congo in Africa actually has more than half the world’s supply of the element. So there will be stiff competition for Canada.
Kroll dismisses concerns about bottlenecks in raw material supplies.
“The only restriction on lithium was, when it first came out, we didn’t know we needed that much of it. It was a case of building out the infrastructure to get it out of the ground. That was the only choke point. But it’s not a rare metal in the least,” Kroll says.
Lithium ion phosphate batteries are the current go-to safe high-energy-density battery, and they will likely continue to be for the next three to five years, according to Kroll. But given universities’, private companies’ and the military’s massive efforts to find the next generation of battery, different materials may render cobalt speculation a dud just as mining gets underway.
The public’s obsession with EV range is pushing that battery development. Everyone wants an EV to have the same range as an internal combustion engine vehicle, even if the average commute is about 30 kilometres, after which the car sits in the driveway till the next day.
“But the consumer is always right, so currently our car will do 160 kilometres easily,” Kroll says. “A Tesla will go 400 kilometres. Batteries are improving between 10 and 15 per cent every year because there is so much emphasis on batteries. Batteries are the new oil.”
The cost of batteries is also coming down by 10–15 per cent each year, according to Kroll. So the raw materials going into them may not have the margins in the future.
So if not in supplying the raw materials, where is Canada’s opportunity in the electrification of transportation?
“By supplying probably the most important component: the ingenuity and innovation,” Kroll says. “Really, this is a Canadian car. Like Apple products, which are designed in Palo Alto and manufactured in China, the inspiration, design, innovation and the engineering for our products come from Vancouver.”
Canada can take the walk-on part in the unfolding drama as EVs hook up with autonomous driving (see sidebar)—or take a lead role in made-in-Canada low-carbon power generation and transportation products.
“There are millions of cars in the world. If I’m the only person in Canada doing this, then I’m an idiot, and I totally read things wrong,” Kroll says. “But if BMW, GM, Ford, Tesla, Renault and everybody jumps in, that’s good for me, good for you and for everybody.”