Canada needs to keep watch on the U.S. election as it could impact the pace and direction of our EV policies
While there is no doubt that the majority of political discussions in Canada are centered on the prospects of an upcoming federal election, there is much to gain by paying closer attention to what will be unfolding in the United States in the upcoming months — and this is particularly true for automobile dealers.
Indeed, the American electoral process has officially started with the Iowa and other Republican caucuses. This lengthy endeavour, which will surely be punctuated by grand announcements and partisan nastiness, will culminate on November 5th 2024 once a new President has been chosen.
The importance of this result for Canadians consumers and business owners is more nuanced, detailed and intricate than the traditional and often repeated fact that the trade relationship with the Americans is key to the economic survival of our own economy.
In reality, the same way a proficient conductor sets the tempo of its orchestra, both the President and the Congress have the ability to dictate the pace at which policies and regulations are being deployed — or even rolled-back — across North America.
Whether it is through free trade agreements, environmental regulations or innovation policies, the U.S. government can silently strong-arm their economic partners into certain decisions that would promote alignment and coordination with U.S. policies.
This has major implications for Canadian auto dealers because there are specific subjects linked to their business that are quickly becoming political battlegrounds both across and within party lines.
Traditionally, when an issue becomes heavily scrutinized, it tends to divide political actors and pushes them to adopt talking points that are unique to them and that resonate with their own specific electoral bases.
It generates a plethora of positions that are more often than not insufficiently fleshed-out, thus resulting in a public debate that lacks substance, that promotes cheap and easy punchlines while the overall situation is much harder to predict and is more volatile.
This is what we are starting to see with the electric vehicles debate in the United States.
During this ongoing process, where multiple states have either adopted or worked towards the implementation of an EV mandate, major political figures have chimed in with their own takes to try and generate electoral momentum.
The potential ripple effects of a new American direction on EVs for the Canadian auto retail industry are highly significant: the implementation success of Canada’s federally-led electric vehicle mandates is strongly dependent on having a proper alignment with U.S. policy.
The harder it becomes to predict where both individual states and the U.S. government are going with these mandates, the harder it is for manufacturers and auto dealers here in Canada to plan ahead of this important market transition.
The recent involvement of former President Donald Trump in this debate is yet another example of how the green transition is already, and will be increasingly, a battleground topic in the next election.
By declaring that EVs “don’t go far and they cost a fortune”, Donald Trump positioned himself clearly in opposition to policy direction that is becoming more and more prevalent around the world1.
On the other hand, President Joe Biden’s advisors have claimed that the comments of Donald Trump provided little to no context to American consumers dealing with these important financial decisions. They also pointed out that this transition will generate historic levels of American auto manufacturing jobs in the U.S and that it is Trump’s fault if China has surpassed the United States in the EV market.
The floors of the Capitol have also seen fiery debates on this matter. In early December, a proposed regulation from the EPA (Environmental Protection Agency) requiring 67 per cent of new vehicles sold to be electric by 2032 was challenged by a bill passed in the house with heavy cross-party support.
One thing is for sure, the table is set for the discussion on electric vehicles to become a key area of focus for both parties in the upcoming elections.
Even if these political games can seem unrelated to Canadian auto dealers, there is no doubt that any changes in American policy would have a direct effect on how our own politicians are interacting with this file.
It will be important and extremely informative to track how this debate is evolving down south: if it catches fire in Washington, it very well could become — as it should be — the next big thing in Ottawa.
REFERENCE:
1 Politico, Why the battle over electric cars is primed to take off, December 2023.
