Quebec's Electricity Industry

Quebec's Electric Vehicle Sector Faces Challenges Amidst Slowdown and Uncertainty

The electric vehicle (EV) sector in Quebec is currently navigating a challenging period, marked by a slowdown and uncertainty. With over 200 companies operating within the sector, including equipment manufacturers, fabricators, and suppliers of all sizes, the industry is crucial for the province's economy.

One of the main obstacles facing the sector is gaining support from the Quebec political class. This is a concern shared by Michelle Llambias Meunier, president of Propulsion Quebec, an organization dedicated to the promotion and development of the EV industry in Quebec.

Meunier believes that more flexibility is needed for the next 12 to 24 months to help the sector thrive. She suggests that the industry needs both a stick (regulations) and a carrot (support) to succeed. The government has proposed to loosen, but not abolish, the 2035 transport electrification targets, which some industry players view as a step in the right direction.

However, the recent debacle of companies like Lion Electric and Northvolt has cast a cloud of uncertainty over the sector. Several promising enterprises in the sector are dealing with the typical valley of death for emerging technologies, a period characterized by a lack of funding and resources.

To address this issue, Propulsion Quebec had identified the need to create a venture capital and private investment fund of at least $100 million. The organization stated that it had found European partners to launch this fund, but the institutions and persons involved in building the fund have not been specifically identified.

The EV sector in Quebec is also facing reluctance from elected officials to defend its enterprises. This is despite the sector's potential to support manufacturers of new material technologies, such as battery cells or other electronic components, which require a different approach, according to Meunier.

The pandemic has further exacerbated the challenges faced by the sector. During the pandemic, Propulsion Quebec commissioned a report from the firm EY on the financing of the Quebec electric vehicle sector, which found that the current financing model is not adapted to this industry. Governments offer tax credits, but they are usually granted to companies years after the request has been made and the credit, granted.

Quebec does not lack technological investment funds, but they mainly specialize in digital and software technologies. There is no specific investment fund in Quebec that could fill this void for the electric vehicle sector, which is experiencing a slowdown.

The desire to decarbonize all transportation by 2035, known as the "framework," presents both opportunities and challenges for the sector. The sector's ability to overcome its current challenges and seize these opportunities will be crucial for its future success.