Will the end of electric-vehicle subsidies hurt London-area manufacturers?

The end of federal government cash subsidies for electric vehicle purchases will likely have little effect in London and region, the hub of EV production in Canada, automotive industry observers say.

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While Southwestern Ontario has become a hotbed of EV production, much of it is intended for the US market, meaning the subsidies don’t apply to the consumers.

“We’re not making that many EVs in Ontario yet. The end of these incentives will have an impact on the sale of EVs in Canada, but most of those are imported vehicles,” said Brendan Sweeney, director of the Trillium Network for Advanced Manufacturing, a manufacturing advocacy group.

The Cami Assembly plant in Ingersoll makes two versions of the commercial electric van the Brightdrop, but the bulk of those sales are to the US

“It doesn’t help, but I think the world is changing. EVs are changing and sales are going up monthly,” said Mike Van Boekel, chairperson of Unifor Local 88, representing Cami workers. “This will hurt, but I think now, EV vehicles can stand on their own two legs” and don’t need the subsidy.

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“These vehicles are caught on. Every month there’s a sales increase. They’re here to stay.”

The BrightDrop commercial vans have proven popular for fleet sales, boasting lower operating costs than internal combustion engine vehicles, not requiring gasoline or as much engine maintenance, Van Boekel said.

GM reported more than 500 BrightDrop vans were sold in Canada in 2024, and sources close to the automaker stated total production for Cami Assembly was more than 1,700 in 2024, meaning about 1,200 were sold in the US

The federal government recently announced it has “paused” its incentive program that offered Canadians rebates of up to $5,000 when buying or leasing electric vehicles. Transport Canada stated the incentives for the zero-emission vehicles program has been paused as “funds have been fully committed.”

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More than 546,000 vehicles sold or leased qualified for the incentive since the program began in 2019. In 2023, zero-emission vehicles accounted for 11.7 per cent of Canada’s market, up from 3.1 per cent in 2019.

The Charger Daytona, assembled in Windsor, is the first EV car made in Ontario. It just hit dealer lots late in 2024 but also is expected to sell south of the border, Sweeney said.

At Toyota plants in Cambridge and Woodstock, the hybrid RAV4 and three hybrid Lexus vehicles made there don’t qualify for the subsidy program and neither does the Honda CRV hybrid assembled in Alliston.

The subsidy applies only to fully electric vehicles and plug-in hybrids. Toyota and Honda assemble what the industry refers to as “mild hybrids,” Sweeney said.

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Volkswagen and its electric vehicle battery subsidiary PowerCo is building a $7-billion electric-vehicle battery plant in St. Thomas that will make batteries for vehicles largely assembled in the US But PowerCo has made it clear it will sell to others, including a Canadian market if there is demand.

In an email response to Free Press questions, PowerCo officials said there’s no change looming for the plant despite the end of subsidies.

The St. Thomas plant is expected to open in 2027, with about 3,000 workers. Sweeney said PowerCo has made a 50-year commitment and he’s “not concerned about (the end of subsidies) having an impact.”

Volkswagen also is partnering with Rivian, another EV manufacturer and Sweeney would not be surprised to see St. Thomas-made batteries shipped to Rivian and Mercedes plants as well, he said.

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As for Ford of Canada, it has delayed EV vehicle production at its Oakville assembly plant to 2027, the automaker announced.

Of much greater concern, Sweeney said, is the threat of the US imposing 25 per cent tariffs on Canadian goods shipped into the US, threatened by US president-elect Donald Trump when he takes office.

That would push up the costs of goods made here, slowing production.

“The biggest concern now is tariffs. If a 25 per tooth tariff comes in, everyone doing anything in Canada for the US will be hurt, so subsidies won’t matter,” said Sweeney.

“My concern is that we will not buy from them and they will not buy from us and it de-stabilizes a very productive trade relationship unnecessarily.”

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