The long-anticipated revolution in electric vehicles (EV) is finally underway, with frenzied EV activity this year in all quarters of the global auto industry.
The world’s automakers are committed to spending about $200 billion (U.S.) over the next four years to accelerate the transition to zero-emission vehicles.
It is expected that about 350 new EV models will be launched over the next few years.
And thanks to recent breakthrough developments, it looks like the Southern Ontario auto industry, still Canada’s biggest manufacturing sector, will play a leading role in the EV transition.
That’s a relief.
Canada’s auto industry has been in decline for two decades, losing about 30 per cent of its vehicle production to lower-cost jurisdictions in Mexico and the U.S. South.
And until recently, it also seemed likely that Canada would be left behind in the EV revolution. Canada has produced just 0.4 per cent of the approximately 2.2 million EVs on the road worldwide. The global fleet of EVs is expected to increase to as many as 300 million vehicles by 2030.
But the gloomy outlook for Canada has brightened in recent weeks with decisions by Ford Motor Co. and Fiat Chrysler Automobiles NV (FCA) to invest a total of $3.5 billion to retrofit their Oakville and Windsor plants, respectively, to EV production.
Canada was earlier passed over for EV production, notably with the 2018 decision by General Motors Co. to shutter its Oshawa plant, and instead retrofit a GM factory in Michigan for EV production.
But much has changed since then. And much more will have to change for Canada to reap the full economic bonanza that this once-in-a-lifetime opportunity presents. More on that later.
What changed since 2018 is that Ottawa and Queen’s Park are now determined to protect the Canadian auto sector.
With production of about 2 million vehicles a year, Canada is the world’s 12th-largest automaker.
The Canadian industry is also world-class in quality and innovation.
To secure its future, the two governments have invested almost $600 million in the reinvention of Ford’s Canadian operations.
That’s still a bit shy of the level of state investment other countries make in their auto sectors. But it’s much closer to the global average, in an industry that has always been a public-private-sector partnership.
Those two governments are also expected to invest in FCA’s planned Windsor makeover.
Two additional changes since 2018 are an increased EV adoption rate by Canadian consumers, and the emergence of an EV recharging infrastructure. The two go hand in hand, of course.
Among G7 countries, Canada is tied with Germany for the highest EV adoption rate, at 3.0 per cent of total vehicles on the road. The global average is 2.5 per cent. British Columbia leads the country at about 5.0 per cent.
The long-awaited emergence of recharging outlets, or “chargers,” remains gradual but has lately shown more impressive growth.
Late last year, Petro-Canada completed its coast-to-coast “Electric Highway” of 40 EV charging stations along the Trans-Canada Highway.
This year, Canadian Tire Corp. Ltd. and convenience store giant Alimentation Couche-Tard Inc. unveiled plans for their own networks of charging stations.
The assembly of EVs is only part of the story, of course.
Domestic EV production will provide a ready market for sophisticated EV components made by Canadian auto-parts makers.
It is the parts makers, ranging from giants Magna International Inc. and Linamar Corp to startups making highly specialized components, that account for most of the auto sector’s employment.
The speed and resolve with which the auto industry is reinventing itself will appear in hindsight to have been astonishing.
Few industries are more hidebound than automaking. It has had to be forced into almost every major safety and fuel-efficiency improvement it has made, usually by government regulators.
To be sure, governments are among the confluence of factors that have pushed the auto industry to fully embrace EVs, with which they merely dabbled for years.
The fight against climate crisis, and the challenge of improving air quality in car-congested cities, is a preoccupation of governments worldwide. With increasing vigour, they have impressed their own sense of urgency on automakers.
Meanwhile, as every major automaker has joined the race to become an EV leader, EV production costs and vehicle prices have come down. Speed and acceleration performance have improved. And EVs now boast long ranges on a single charge, allaying the “range anxiety” that has kept potential buyers away from EVs for fear of running out of juice on a long trip.
Consumer EV demand is growing as a result. During the pandemic, sales of traditional vehicles powered by internal combustion engines (ICE) plunged in Europe, as in North America. But European sales of EVs have continued to rise during the pandemic.
To capitalize on EVs, Volkswagen AG will spend $40 billion (U.S.) to develop enough EV models to sell 28 million EVs by 2028.
General Motors Co., in even more of a hurry, is aiming to have 20 new EV models in GM showrooms by 2023, part of GM’s planned $20-billion (U.S.) investment in EVs and autonomous, or driverless, vehicles.
Canada is at a turning point with EVs.
Industry experts calculate that the current rate of Canadian progress on EVs will see only a 14 per cent adoption rate for EVs by 2040, far short of Canada’s official target of 100 per cent by that year.
In that scenario, Canada’s EV sector would grow to $43 billion in GDP from the current $1.1 billion, and account for 342,000 jobs compared with the current 11,000.
There is another scenario, however, in which governments pair Canada’s growing proficiency in making EVs with the country’s buried treasure of lithium, cobalt and other minerals required in EV production.
The resulting world-class EV supply chain would need to be augmented with mandated minimum quotas on EV sales, as California did this year in banning sales of new gasoline and diesel-powered vehicles by 2035.
In that second, holistic scenario, Canadian EV market share is projected to reach 30 per cent of total vehicles by 2030, and 100 per cent by 2040.
And in that case, the EV sector would account for more than 1.1 million jobs by 2040, and about $150 billion in GDP.
“We believe in an all-electric future,” Mary Barra, GM’s CEO, told reporters earlier this year.
If Canada does emerge as an EV leader, Barra might reconsider her decision to end the 113-year-long tradition of automaking in Oshawa, at a plant that was distinguished by world records in quality and productivity.
Otherwise, there are some 20 other major automakers that might be interested in taking the plant off her hands and giving it a second life as an EV maker.
Glimmer of hope for investment in Europe: EY survey – TheChronicleHerald.ca
By Mark John
LONDON (Reuters) – Global executives see a smaller hit to their investment plans for Europe than they did earlier this year and are somewhat more upbeat about the continent’s future appeal, a questionnaire by professional services group EY found.
The survey, conducted in October before a series of COVID-19 vaccine trial breakthroughs, showed that 42% of executives now expect a decrease in their 2020 investment plans and 31% plan to delay them to 2021.
That compared with 66% who expected decreases and 23% who saw delays when asked the same question back in April. This time around, a small number – 10% – even saw an increase to their 2020 investments, something no one did in April.
While that still means a big overall hit to foreign direct investment after 2019’s record year, EY noted that 21% of those surveyed believed Europe would be more attractive for investment post-Covid compared to just 8% in April.
“It is promising that investors believe that over the next three years, Europe will become a much more attractive destination for investments than before pandemic,” EY Area Managing Partner Julie Teigland said.
The findings were based on interviews with 109 global executives across 14 industries in October.
Upbeat news from vaccine trials are starting to support economic sentiment. The monthly eurozone Purchase Managers Index (PMI) for November saw a rise in its “future output” component in November to its highest level since February.
Among the other takeaways from the EY survey, 63% expected faster roll-out of digital customer access to surveys in the next three years (versus 55% in April) but only 37% now saw a reversal of globalisation (versus 56%).
(Reporting by Mark John, editing by Ed Osmond)
Digital Technologies have a strong return on investment, survey says – JWN
Canada’s oil and gas industry says investing in digital oilfield technologies can generate a strong return on investment even in today’s difficult market, according to a survey of industry professionals conducted as part of the Daily Oil Bulletin’s 2020 Digital Oilfield Outlook Report.
The survey asked respondents to evaluate 11 key digital applications along three dimensions: return on investment, technology maturity, and the readiness for their organizations to adopt the technology. The applications represent how organizations use technology to deliver value.
At a time when many companies are in survival mode as they attempt to hang on until the pandemic-inspired collapse in demand for their products abates, return on investment takes on particular significance.
Evaporating cash flows have left many companies in no condition to make any investments, let alone those that don’t virtually guarantee positive short-term returns. Many survey respondents said the sense of risk-taking on new technologies – with the attitude they could fail fast and move on – has withered.
However, there was widespread recognition and consensus across industry groups (producers, midstream, OFS) and levels (CEO to analyst) that digital technologies in general have high return on investment with all 11 technology use cases believed to represent a return on investment compared to or higher than other uses of capital in the organization. This bodes well for digital oilfield technologies vying against other investment opportunities in difficult times – an indication they will pay for themselves more quickly than other forms of investment.
The use cases felt to deliver the greatest return on investment – Production Asset Optimization, Automated Production Asset Operations and Predictive Maintenance – play into that narrative for their ability to reliably cut costs and deliver efficiencies. As quickly maturing technologies, they can be delivered for relatively affordable investment with low risk.
Also of note was that Fleet Management, Remote Asset Monitoring and Field Productivity are amongst the most mature and best known, and have return on investment that is closest to other comparable uses of capital. They may have already produced considerable gains in recent years and be perceived to have reached a level of saturation that is more difficult to improve on. Conversely, Biometric Monitoring, at the bottom of the list, maybe seen as one of the least mature use cases from an industrial perspective and therefore considered a high investment risk in difficult times.
Attitudes toward the return on investment have shifted in the five years since the Daily Oil Bulletin’s first survey was conducted. In comparison to the results of the 2015 survey (in which some applications were not polled), there is much more confidence in return on investment from optimizing field workforces, with “remote” applications having seen the biggest jump in perceived return on investment. Of the eight comparable use cases, those that climbed the most in rank over the past five years were Remote Asset Operations, Remote Asset Inspection and Remote Asset Monitoring.
While it is a sign of shrinking workforces in the midst of a major downturn in the industry, it could also be an early indication of more to come as companies are forced to deal with the secondary crisis of the pandemic and the physical distancing that entails for employees. Indeed, “remote” has become a watchword in all sectors of the economy as workers have been forced to adjust to the new COVID-19 reality. The ability to remotely operate, inspect and monitor assets simplifies the physical distancing aspect of these activities even as it trims costs.
For more information, the Daily Oil Bulletin’s 2020 Digital Oilfield Outlook Report, sponsored by Amazon Web Services and Rackspace Technology, is available for download here.
Note: In terms of ROI, a score of three represents a return on investment comparable to other uses of capital, four is higher than other uses of capital, and five is much higher.
India Stymies Investment From Hong Kong Amid China Border Row – BNN
(Bloomberg) — India is subjecting foreign investment proposals from Hong Kong at par with China as part of a new policy that makes approval mandatory for plans from countries that share a land border, a person with the knowledge of the matter said.
Nearly 140 investment proposals valued at over $1.75 billion, mostly from China and Hong Kong — China’s special administrative region — have been put on hold pending scrutiny, the person said asking not to be identified citing rules on speaking to the media.
Amid a border stand off with China, the Indian government tightened rules for foreign direct investment from all nations sharing a land border, making scrutiny mandatory for such investments — a restriction that was earlier applicable only to Pakistan and Bangladesh.
The delays may complicate deal-making and impact the flow of capital from private equity firms and hedge funds, which often include investors domiciled in China or Hong Kong. This may starve Indian companies of investment in the midst of the pandemic-induced economic contraction.
The curbs also apply when the beneficial owner of the proposed investment is situated in any of India’s neighbors. A government panel constituted to approve these proposals is yet to decide on the rules including on beneficial ownership.
The trade and industry ministry spokesman didn’t immediately answer a call made to his mobile phone.
READ MORE: China Gained Ground on India During Bloody Summer in Himalayas
Tensions between the two giant Asian economies have been escalating since May. Twenty Indian soldiers and an unknown number of Chinese troops were killed in clashes along the Himalayan frontier earlier this year.
The military crisis is the worst since the two sides fought a war in 1962. India responded by banning Chinese apps, tightening visa rules for Chinese nationals and imposing curbs on companies from nations sharing a land border from bidding for government contracts.
Earlier last month, Foreign Minister Subrahmanyam Jaishankar had told Bloomberg News that trade with China can’t carry on in business-as-usual mode as long as there are unresolved issues along the border — a disputed 3,488-kilometer (2,167-mile) stretch known as the Line of Actual Control.
©2020 Bloomberg L.P.
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