Fresh Takes

With what batteries?

Legislation can’t solve everything.

The federal government recently announced its intention to force car manufacturers to boost sales of electric vehicles to at least 20 per cent of their Canadian business starting in 2023. Failure to comply will result in expensive fines.

And these sales quotas will keep increasing year after year, reaching 60 per cent in 2030, and 100 per cent in 2035.

Yet, there is no dearth of customers. Anyone who has tried to purchase an electric car this year can tell you that the waiting lists are months, and sometimes even years, long.

There is no doubt that, if the manufacturers could, they would fulfil this demand within a matter of days, not years. Their profitability could only benefit.

The slow pace of sales doesn’t stem from any failure of will, but rather from supply chain issues. Among other obstacles is the rapid rise in demand for rare earth metals, and other metals essential to the manufacture of batteries, such as cobalt and lithium. As their name implies, all these elements are increasingly scarce in the market.

The explosion in demand over these last few years has been such that producers can barely keep up, causing their prices to rise rapidly. Lithium, for example, has seen its price increase more than seven-fold in the last two years, going from less than $10US per kilogram to roughly $80US per kilogram today.

If electric cars are not being adopted as quickly as Ottawa wishes, it is not due to a lack of willpower. Rather, it springs from a shortage in raw materials.

And that problem won’t be solved by quotas, fines, and other legislative tools.

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