Canadian auto startups are in good stead, but there are no guarantees

For the first time since society moved from horse to car, the automotive industry finds itself at a juncture with real opportunities for new entrants. Around the world in places like Silicon Valley, Shanghai, Frankfurt, Nagoya, and other mobility technology hubs, new automakers and new major system suppliers are springing up in response to the global regulatory shift towards zero emission vehicles. Jurisdictions that boast advanced manufacturing as well as applied technology are leading the pack, and places that boast critical minerals and artificial intelligence capacities promise to be the nesting place of a new automotive future. Advanced manufacturing technology, like connected factories and 3D printing of structural materials have allowed for the emergence of micro-manufacturing solutions. Factories that can run small batches of customizable product allow dreamers to consider that they might be automakers as well. Industry 4.0 is as integral to the proliferation of new mobility players as were power trains and design philosophy in the past. To become a new automaker is to contemplate winning market share from the biggest, leanest, and most meaningful industrial ventures in the history of mankind. It has been an inconceivable prospect for decades. The barriers to entry were so high that we have not seen a successful Canadian automaker in 90 years. Why could history change now? What is new today that wasn't true five years ago? It's very simple. Governments around the world have been falling over themselves to commit to 100 per cent zero emission vehicle mandates for target dates in the 2030s and 2040s. Automakers—in an attempt to hold that market share and to respond to what will be a regulated market for the first time in its history—are competing to make zero emission vehicle product announcements for the 2020s. Applying new manufacturing models and advanced consumer technology, companies like Tesla, Rivian and Lucid are challenging a market’s expectation for expansion, return and technological application. Those three companies have delivered less than one per cent of the vehicles built in the last year yet they enjoy a market capitalization that is bigger than any of the traditional automakers. It begs the question of whether this opportunity created by the climate crisis will cause for a disruption that reshapes the automotive sector forever. APMA’s own Project Arrow, launched in response to the prime minister's challenge in the 2019 Throne Speech to contemplate a zero emissions future for industry, is an all-Canadian designed, engineered and built zero-emissions, lightweight, advanced technology concept car. After an exciting three-year journey, it will be unveiled in person in December of 2022. Built to showcase Canadian systems’ and volume part suppliers capabilities to the automakers around the world, the public’s interest in the vehicle as a launching point for a Canadian carmaker has taken on an interesting discussion on whether one could thrive in the markets of tomorrow. Canada boasts all the critical minerals required to compete globally in the battery electric vehicle space. Toronto is a global capital of artificial intelligence and Montreal is a global capital for machine learning. Ontario is one of the top two biggest subnational jurisdictions for automotive manufacturing and auto parts supply in North America together with Michigan. Quebec's core competency in battery cell design and manufacture is emerging as a critical element for all of the carmakers hoping to compete on this continent. All of this puts Canadian auto startups in good stead, but there are no guarantees. All those competing jurisdictions mentioned earlier are places in this world where risk capital is more easily accessed and the culture of technological failure and rebirth is a celebrated cycle that hardens companies, dreamers and the equity markets. That is not Canada's experience, where investors are very conservative in the risk profiles they consider. How do we compete with that? How do we compete with centrally planned economies with state owned enterprises that have market-share goals but not market return expectations? These are some of the remaining barriers that need to be answered before we fire a Canadian Arrow at a global bullseye. Flavio Volpe is the president of the Automotive Parts Manufacturers Association, Canada association of automotive suppliers for the global automotive manufacturing sector. Project Arrow updates can be found at projectarrow.ca The Hill Times