Michigan and Ontario represent the two largest automotive manufacturing markets in North America. While Michigan continues to make more vehicles, Canada’s strengths in technology, talent and trade have made Ontario the best location for mobility companies going forward into this increasingly tech-driven world. And that includes for American auto brands too.
Today, Ontario has the distinction of serving as the Canadian headquarters of five global OEMs—Fiat Chrysler Automobiles, Ford, General Motors, Honda and Toyota. Together, these companies assemble more than two million vehicles each year at their Canadian plants.
They are supplied by an ecosystem of nearly 700 parts suppliers across the country and a talent base with expertise that spans areas such as robotics, reinforcement learning, computer vision, cyber security and automotive software.
Why American automotive companies are innovating up north
Interestingly, for all of Canada’s activity in the sector, there are no Canadian car manufacturers. Yet, the country, and Ontario in particular, continues to be the choice of tech-forward American mobility brands. That’s because it is in the unique position of being one of the only jurisdictions in North America with strong automotive manufacturing expertise and five Innovation Superclusters.
As a result, many American automotive players are investing beyond their Canadian manufacturing plants by also opening AI and advanced automotive software R&D centers in Canada:
- Uber announced plans to make a $200 million investment into its Toronto facility, where it will expand its self-driving vehicle center.
- Ford committed to investing $500 million in 2017 to create its R&D center in Ottawa, and has since announced an additional $380 million will go into its operations across Ottawa, Waterloo and Oakville.
- On the outskirts of Toronto, General Motors set up an R&D facility that focuses on autonomous driving software. And in May, it announced that it would develop a 55-acre track for engineers to develop advanced new vehicle systems at its Oshawa assembly plant property.
American companies that set up shop in Canada also get to be close to the innovation and action of top local players in supporting industries, including Ottawa-based BlackBerry QNX and Canada’s second largest auto parts maker, Linamar. QNX is now embedding its software in more than 150 million next-generation vehicles for clients such as Ford, GM and Hyundai, and Linamar recently partnered with the Canadian government to take advantage of the Innovation Superclusters program. As a result, Linamar is expected to invest $500 million, which includes the opening of an innovation center in Ontario’s advanced manufacturing cluster.
Set up for success in EVs and AVs
While Canada is one of the few countries in the world with enormous natural reserves of the minerals that go directly into manufacturing the lithium-ion batteries for electric vehicles, it also lays claim to a federal tax incentive program that encourages Canadian businesses of all sizes, in all sectors, to do R&D in Canada: the SR&ED tax credit.
Add to that numerous Canadian research and innovation centers and strong R&D partnerships between academics and industry, and you can see why Tesla chose Nova Scotia to open a R&D center to tap into cutting-edge research being done in the battery field.
As the industry transforms from fuel-based models, more and more companies are beginning to manufacture hybrid or electric vehicles in their Canadian assembly plants. Toyota, which makes its RAV4 Hybrid in the Toronto Region, has just reported that sales of its electric vehicles are up by 56 percent compared to this time last year. And Chrysler now makes the world’s first hybrid minivan, the Pacifica, in Canada.
Global manufacturers are also gravitating to Canada because of the abundance and quality of STEM talent emerging from universities such as the University of Toronto, which ranks among the top 20 global universities, and University of Waterloo, whose graduates are the second most frequently hired by Silicon Valley companies. According to Statistics Canada, Ontario alone produces over 40,000 STEM graduates annually.
Further, Canada’s lower costs, as compared to the U.S., are complementing mobility companies’ efforts to get ahead in areas such as connected vehicles and shared infrastructure. At a time when it is estimated that 2.4 million positions will remain unfilled in the automotive industry in the U.S. by 2028, consider this: Ontario’s availability of skilled workers in the automotive industry makes it one of the best destinations, with over 100,000 direct jobs plus thousands more spin-off jobs in communities across the province.
The Canadian government has in place numerous incentive programs and mechanisms to support American mobility companies. And Canada’s free-trade agreements allow you to easily supply not only the American market but international markets as well. Yet, when those of us at Invest in Canada speak with American companies, we find that many often still don’t know where the opportunities are in Canada.
Invest in Canada wants to help you see and realize all of those opportunities. We invite you to get connected with us and start exploring them today: https://www.investcanada.ca/contact.