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Another bumpy road ahead for the auto sector in 2025? New Pacifica models are prepared for transport at Stellantis’s Windsor Assembly Plant on Feb. 26, 2024.Photo by Dan Janisse /Windsor Star
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Governments and the automotive sector were reminded in 2024 that consumer demand and marketplace preferences remain powerful driving forces in just how quickly we arrive at the electric destination they have chosen to push the industry.
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Electric vehicle sales continue to grow, but companies are easing off the throttle on EV production and investment, and ambitious government deadlines look increasingly tenuous in the face of consumer hesitancy.
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“We’re in a year of transition in an industry in transition,” said Sam Fiorani, AutoForecast Solutions vice-president of global vehicle forecasting.
“Everybody was preparing for a quick shift towards electrification and the market is just not there yet,” he told the Star.
“Manufacturers and suppliers weren’t ready for traditional internal combustion vehicles to last 20 more years. They were planning on a complete transition towards at least hybridization, if not fully electric, by 2035 to 2040.
“Expecting your payoff for EV investments in the next 10 to 15 years was rushing things a bit.”
It’s become incredibly difficult for automakers
Fiorani said the entire industry is now going through a re-calculation of needs, available investment capital, vulnerability to Chinese EV imports and the new political landscape presented by U.S. president-elect Donald Trump’s incoming administration.
“It’s become incredibly difficult for automakers,” Fiorani said.
“The industry is re-adjusting, finding the money they earmarked for different programs won’t pay off in the time they planned. A lot of investments have been delayed or cancelled altogether, with plans for significant disruption in the industry, they’ve been disrupted even further.”
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Fiorani noted the landscape in North America is even more treacherous to navigate than in the rest of the world.
Overseas automakers at least know the rules that will define their EV space, unlike in North America.
“The global industry is re-adjusting to the new normal, but the North American industry still has to figure out what that new normal is,” Fiorani said.
“With the potential of changing incentives for buyers and manufacturers, the whole North American automotive industry is just waiting for new direction in the coming four years.”
Fiorani said automakers are going to have to deal with the further splintering of the market during this messy phase of the EV transition.
With the Trump administration signalling it intends to ease emission and EV sales mandates and reduce incentives for consumers and manufacturers, Fiorani said companies will be dealing with new competition at the same time as they have to meet demand for a variety of powertrain options.
“All the companies are dealing with a lot of new competition, whether it’s from additional EV players or existing manufacturers, or they’re selling EVs alongside traditional ICE and hybrid vehicles,” Fiorani said.
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“There are so many more choices and they have to spread all those costs across fewer vehicles per segment and powertrain. This spreads down to the supplier industry and dealers.
“It’s hampering their chances of making money as we go forward in the next 15 to 20 years.”
A car carrier leaves Stellantis’s Windsor Assembly Plant with new Pacifica models on Feb. 26, 2024.Photo by Dan Janisse /Windsor Star
The Canadian auto industry hasn’t escaped feeling some of the pain after enjoying a period when it saw $50 billion in new investment in the EV transition.
Ford has paused a $1.2-billion investment to build a cathode plant in Quebec. Belgian high-nickel cathode manufacturer Umicore has postponed a cathode plant in Kingston.
The Swedish battery manufacturer Northvolt has filed for bankruptcy protection but is going ahead with construction of a battery plant in Quebec. Northvolt’s Canadian subsidiary is financed differently than in the U.S.
“For the first part of the year we were at the tail end of the biggest investment run in the automotive sector’s history in this country,” said Automotive Parts Manufacturers’ Association president Flavio Volpe.
“There was a lot of hope in the future, but now there’s anxiety,” he told the Star in a year-end interview.
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Volpe said the move towards full production of batteries and new products at Windsor’s NextStar Energy and Windsor Assembly Plant, along with Honda’s $15-billion investment in Ontario, are the biggest stories of the year in the Canadian automotive industry.
“The only thing that matters in the automotive business is getting the start of production,” Volpe said. “They’ve done that in Windsor.”
The Honda investment will result in four new plants in Ontario. It is the single-largest automotive investment ever in the North American industry.
Prime Minister Justin Trudeau, left, Honda executive Toshihiro Mibe and Ontario Premier Doug Ford walk along an assembly line at an April 25, 2024, event announcing plans for a Honda electric vehicle battery plant in Alliston, Ont.Photo by Nathan Denette /THE CANADIAN PRESS
“They’re building a supplier cluster around NextStar and they have to feel good about the opportunities around Honda,” Volpe said. “Honda’s bet is larger, materially, but Stellantis’s bet is at least equally important.
“Stellantis went out first in Windsor and that lent confidence to Honda’s decision. Stellantis did it in a vacuum.”
Fiorani said Windsor is well-positioned to ride out this challenging period with new products and flexible platforms that can quickly adapt to market demand.
The extended life of ICE products is also good news for Ford’s two local engine plants, and the company’s decision to convert the Oakville Assembly Complex for F-series truck production will only increase demand for Windsor engines.
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Unifor national president Lana Payne singled out getting the truck production in Oakville was a key accomplishment for the union in 2024.
“There’s no straight line from A to B in this transition,” Payne told the Star.
“Finding new product for Oakville pre-occupied our time from April to July. We were able to secure additional investment and security for that facility.
“Securing the Oakville investment also means additional workers at Ford’s engine plants in Windsor. There were some upsides to these bumps in the road.”
Windsor and Ontario auto sector ‘a stable place to do business,’ says Unifor national president Lana Payne, shown at a news conference in Toronto on Aug. 29, 2023.Photo by Tijana Martin /THE CANADIAN PRESS
Stellantis had its own sales and inventory challenges in 2024 that led to layoffs in the U.S., but its Windsor Assembly Plant workforce and its suppliers have been working six- and seven-day shifts regularly all year.
“Stellantis is in a good position because its new platforms don’t put all their eggs in the electric basket,” Fiorani said. “All their models can be either BEV (battery electric vehicles), hybrid, gas, hydrogen and whatever the market demands in the next decade.”
Fiorani said Windsor Assembly is expected to also be home for the production of new Chrysler and Dodge crossovers.
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In addition, Fiorani said it appears Stellantis is considering adding a fully electric Pacifica minivan.
The Windsor plant is currently producing gas-powered and hybrid Pacificas and the new electric Dodge Charger Daytona. The company is also moving up production of the gas-powered, four-door Charger by several months in 2025.
We’re confident that we can get a third shift
With new products, provided they can gain some traction, Stellantis Canada president Jeff Hines said he’s optimistic a third shift will be added at Windsor Assembly in the year ahead.
“We’re very confident between this product (Dodge Charger Daytona) and the Pacificas we build there today that we’ll have a lot of demand, not just in Canada but across the U.S. as well,” Hines said in Windsor earlier in December.
“We’ll make the decision here soon once we get the vehicle launched. We’re confident that we can get a third shift there at some point in 2025.”
‘We’re confident.’ Jeff Hines, president of Stellantis Canada, was keynote speaker at the Windsor-Essex Regional Chamber of Commerce’s 148th annual general meeting at the Ciociaro Club in Windsor on Dec. 11, 2024.Photo by Dan Janisse /Windsor Star
Payne said Unifor will also be intrigued by how Stellantis rebuilds its executive suites after the departure of CEO Carlos Tavares and how quickly they’ll move to repair their relationship with dealers.
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“They’ve got a lot of work to do,” Payne said.
“It’s always a good thing when your chief executive and vice-presidents have a clear understanding of the North American market and the role Canada and the Canadian workforce plays in the company’s history.
“This is a workforce that wins award after award. It’s a stable place to do business.”
Volpe and Payne agree the turbulence will likely be even greater in 2025, with the threat of Trump’s tariffs, Chinese competition and the possibility of bankruptcies and consolidations.
“The potential of 25-per-cent tariffs has to be the No. 1 problem right now,” Payne said.
“Second will be our response too if the EV mandates and Inflation Reduction Act are removed (in the U.S.). If President Trump gets rid of the IRA, our position as a country needs to be to continue to go ahead with our commitment to those investments.
“That would signal we’re here to support jobs and the industry.”
Premier Doug Ford listens as Flavio Volpe speaks in London on May 24, 2023, during an announcement of new funds for skilled-jobs training.Photo by Mike Hensen /Postmedia News
Volpe expects more mergers and acquisitions among his APMA members, citing ABC Technologies, Martinrea International and Linamar as companies that have built their success on a willingness to pursue acquisitions.
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Volpe said he expects Volkswagen’s multibillion-dollar battery plant investment in St. Thomas will also continue despite the company saying it plans to close three plants in Germany.
“I think VW in Ontario is safe because they have potential products in (Mexico), Chattanooga and, soon, South Carolina. Those three plants are more than enough business for a battery plant.”
Volpe noted a possible change in the federal government in 2025 is another development that could alter the automotive landscape.