Industry Insight: KPMG reports on state of industry, predicts heightened EV production

Richmond Hill, Ontario — Under normal circumstances, the Ontario automotive sector accounts for more than 20 percent of the GDP, but when North America’s economy shutdown over COVID19—so did sales.

When production started ramping up in May, a rebound began and produced a 46 percent improvement, although annual sales are down 16 percent year-over-year, an estimated 1.6 million units.

DesRosiers Automotive Consultants Inc. in Richmond Hill Ont., reports 165, 000 vehicles sold in July, a 6.3 percent increase, which is down 4.9 percent below July 2019, but a good month, nonetheless.

Pushing ahead, the questions hanging over the industry is what the future will look like after COVID.

A future report on Canada’s Automotive Future by KPMG states production of EVs by the major OEMs will accelerate rapidly over the next five years, as will autonomously feature.

By 2025, the advisory firm predicts as many as 13 million EV and hybrid vehicles produced annually.

Ontario may have been North America’s top automotive supplier in 2017 (more than 2 million vehicles), but Canada’s industry produces just 0.4 percent of global EV production, 80 percent lower than the global average, according to the International Council on Clean Transportation (ICCT) in Washington.

Unifor began negotiations with Detroit three in August by attracting EV production investment as part of the mix. So far, Ford and Fiat Chrysler, and most recently GM have agreed to procure EVs at their Canadian plants.

However, the KPMG report says Canada’s industry will need a significant overhaul to accommodate the design, engineering, and assembly of EV’s, which will be very different from the production of internal combustion engines (ICEs). For example, EVs have thousand of fewer parts.

Making a transition to EV production offers promise, but don’t expect to see an end to ICE vehicles anytime soon. Internal combustion vehicles will continue to have a strong presence. EV sales are not expected to exceed ICEs until at least 2040.

Having the infrastructure in place will help drive EV manufacturing investment in Canada. Government climate change goals are setting the stage and there are initiatives such as a federal $300 million investment in infrastructure, establishing charging stations, and promoting consumer purchases of vehicles. But KPMG warns attracting investment will require Ontario cutting red tape.

To check out Canada’s automotive future KPNG report, click here.

KPMG International is the third-largest accounting firm in the world. Headquartered in the Netherlands, KPMG provides accounting, consulting, tax and legal, financial advisory, and assurance services from more than 820 locations. KPMG’s member firms are located in more than 159 countries across the globe.

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