Global Commerce and the International System


ountry Report: Canada

Prepared by:

DG544: Global Commerce and the International System

Professor:

20 February 2022

Figure 1:Canada map showing the country positioned in northern North America between the North Pacific, Arctic, and North Atlantic Oceans. https://www.cia.gov/the-world-factbook/countries/canada/map.

Introduction

EZEV (EZ Electrical Vehicle) is a proposal for a non-profit international company that provides an informational service for current and potential electric vehicle customers. It will be a comprehensive, online digital tool with an accurate and reliable consolidation of Electric Vehicle information. A one-stop-shop for navigating the market and understanding the costs and benefits of purchasing an EV in their specific location as well as compare their local EV options, learn about local infrastructure and maintenance options, and get linked with a reputable dealer or service center. Canada is aiming to reduce transportation sector greenhouse gas emissions by 12 megatons by 2030, and of the 12-megaton target, 7 of that is planned to be from light-duty vehicles which would require the retirement and replacement of 1.8 internal combustion engines—7% of the vehicle fleet (PwC, 2022). To propel the transition forward, Canada is targeting a 10% share of EVs by 2025, 40% by 2030, and 100% by 2040, and it hopes to help accomplish that by getting total cost of ownership down, create government incentives, and enable a buildup of a robust charging infrastructure (PwC, 2022). Some of those critical elements for adopting EVs in Canada are taking shape, and the future will likely see a growth and continuance of that adoption. While supportive non-profits and organizations in Canada exist and are already marketing for the adoption of EVs to consumers in Canada, millions of EVs will need to be sold in the next decades, so there may exist a need for another resource like EZEV to help propel Canada’s EV revolution.

Brief History

Canada was inhabited for a millennia by indigenous peoples until Europeans arrived in the 15th century to colonize the land that is modern day Canada. The French and the English were the first colonizers, but the French ceded nearly all its North American possessions to the UK in 1763 and the provinces of Canada were joined by the British in 1840 (Canada, 2015). In 1867, the united provinces of Canada joined the remaining Brunswick and Nova Scotia provinces and formed a self-governing dominion entity officially adopting “Canada” as the legal name. Canada gained legislative independence from the UK in 1982 when it passed the Canada Act (CIA, 2022). Overall, Canada has economically and technologically developed in parallel with the US as its neighbor, sharing the world’s longest international border. Today, Canada faces challenges meeting public demands for quality improvements in health care, education, social services, and economic competitiveness, and Canada aims to welcome foreign direct investment to develop its diverse energy resources while maintaining a commitment to the beautiful, sprawling Canadian landscape and global environment (CIA, 2022).

Environment

Canada is in Northern North America, north of the US, bordering the North Atlantic Ocean on the east, North Pacific Ocean on the west, and the Arctic Ocean to the north. Canada has the longest coastline in the world, and a very diverse landscape with temperate weather in the south and subarctic and arctic weather to the north. The terrain is mostly plains but with some of the world’s largest mountains to the west and lowlands in

Figure 2: An overlay of Canada over the US. It is slightly larger than the US. https://www.cia.gov/the-world-factbook/countries/canada/images/2f83f198-45ba-5506-a6f4-fa9db0ec01c9

the southeast. It is also rich in natural resources, notably in raw materials for cathode and anode manufacturing and chemical precursors for electric vehicle batteries (Invest, 2021). The population is mostly positioned discontinuously within 200 miles of the southern border with the US, nearly 81% of the total live in urban areas with a 0.95% annual urbanization rate of change. The total population is roughly 38 million as of July 2021, with “Canadian” being the nationality, and English and French being the two mostly spoken and official languages. The most populated province is Ontario, then Quebec, then British Columbia. The age group of 25- to 54-year-olds makes up almost 40% of the total population (CIA, 2022).

Transportation in Canada accounts for nearly 25% of greenhouse gas emissions, and Canada’s government is quite steadfast in its conviction to electrify its light-duty vehicles and shift to cleaner fuels to decarbonize the transportation sector (Sarabia, 2020). This means that the EV market will have much government support as it grows in Canada, however, one of the largest challenges with adoption by consumers lies with the charging infrastructure. Because the cities, where most of the population lives, are spread out and separated by large distances, consumers will need an expansion of fast charging networks. Canada’s first cohesive nationwide EV fast charging network came from Petro-Canada in December 2019 with 40 fast DC chargers, and the network is still growing along the trans-Canada highway. Tesla also owns 584 stations along the highway, and a few other smaller efforts are underway with government contribution

Figure 3: 6,720 EV and PHEV charging station in Canada, current as of 2020 https://electricautonomy.ca/2020/03/02/canadas-ev-charging-networks-2020/

to add charging stations around Canada (Sarabia, 2020).

Implications

Though most of the population lives in urban areas where charging stations are easier to find, and commutes are less likely to exceed EV range, the large space and open roads between towns and urban areas leave consumers less confident or convinced to switch. A more even distribution of EV charging infrastructure between urban and rural areas has shown to increase consumer confidence in EVs, which should help bolster rates of adoption (Sarabia, 2020). Canada has many efforts underway to help bolster the charging infrastructure and encourage consumers to switch. EZEV can help instill that consumer confidence by keeping track of the growing network and presenting the information in a clear and effective manner. Since EZEV needs a digital platform to operate, the geography and sparseness would have minimal effect on EZEV operations.

Social

Canada’s population of 38-million-person society is known as ‘the just society’ with a culture underpinned by tolerance, respect, and community orientation. Though generally individualistic, contribution to community is important and the country has a similar approach to its role on the global stage, being heavily involved in UN peacekeeping missions and a large foreign aid donor. Canada is heavily influenced by the US, with a large majority of Canadians living within 50 miles of the Canada/US border, language and behavior and accent can be similar. The Canadian people share the informality, freedom of expression, pioneering spirit and entrepreneurial mindset of many Americans. Canada also boasts its cultural diversity (Canada, 2022). There is a distinction between the two majority populations that speak English or French are called Anglophones and Francophones and they have few cultural differences, though they are mostly territorial and linguistic (Canada, 2022).

Implications

Canada’s society is similar in many ways to the US due to the proximity of its urban populations. There will be minimal cultural differences if EZEV were to design a tool or website for an American market and then apply it to the Canadian one. EZEV could take advantage of the Canadian consumers by appealing to their respect for the environment and community orientation. EZEV could incorporate facts about the impact of switching to EVs on their consumer’s local environments. EZEV should also be easily convertible to French, since a large majority of the population are Francophiles.

Political

Canada is a federal parliamentary democracy (the Parliament of Canada) under a constitutional monarch, which makes it a Commonwealth realm. Federal and state authorities and responsibilities are regulated in the constitution (CIA, 2022). The head of state is the King or Queen of State (currently Queen Elizabeth II) and the elected Prime Minister is the head of government. Canada has three levels of government: federal, provincial, or territorial, and municipal. The federal government is based in Ottawa and deals with national and international matters.

Canada is described as a full democracy with a tradition of liberalism and egalitarian, moderate political ideology. Far-left and far-right politics have never been very prominent in Canadian society, and the government has a strong government founded under principles of peace, order, and good government. There is also a large emphasis on social justice, which distinguishes Canada’s political culture from many others (Canada, 2022). The country has a multi-party system where many of its legislative practices come from UK parliament. The dominant parties are the Liberal Party of Canada and the Conservative Party of Canada, but there are other parties including the New Democratic Party, Quebec nationalist Bloc Quebecois and the Green Party of Canada.

Because the government emphasizes social justice and social programs, there are regulations and social programs that have instituted a strong welfare state, more extensive in some ways than the US. The social democracy makes the welfare state a central political focus and simultaneously accepts that capitalist economies are not self-regulating but require levels of state intervention for stability.

Implications

The strong Canadian government enables its citizens to enjoy similar freedoms to those enjoyed in the US. Much of the politics, however, focus on social concerns and programs, which help highlight reduction in inequality, expansion of freedom, promotion of democracy, and humanitarianism. Government plans and commitments to the environment are heavily backed by the Canadian society. Society can trust the government’s safety net and welfare state to help them in their everyday lives. Businesses can generally rely on government and societal stability and the promise that the government will contribute heavily to making the societal EV switch.

Economic

Canada greatly resembles the US’s market-oriented economic system, production, and high standards of living. Canada’s economy has impressively grown since World War II in manufacturing, mining, and service sectors which has transformed the nation from a largely rural economy to an industrial and urban one. Business culture in Canada also resembles the US’s and UK’s but varies by region and sector. Canadian business also traditionally values punctuality, equality, and diversity (Nawata et al., 2021).

Canada has a large production operation of crude oil and natural gas, especially from Alberta, which ranks third in the world in proved oil reserves behind Venezuela and Saudi Arabia. Canada is the world’s seventh-largest oil producer, and the largest foreign supplier of energy to the US which includes oil, natural gas, and electric power (CIA, 2022). Canada’s government also encourages foreign direct investment in mining and resource extraction for different materials and markets. They are especially encouraging of foreign investment in EV battery materials and manufacturing (Canada, 2022).

Canada has been in multiple free trade agreements with the US since 1989, which has dramatically increased trade and economic integration between the two countries. The US and Canada enjoy the world’s most comprehensive bilateral trade and investment relationship. Canada has a highly skilled labor force, modern capital stock, and abundant natural resources which have contributed to solid growth from 1993 to 2007. Canada suffered greatly from the economic recession of 2008, but banks have emerged from the crisis to become some of the strongest in the world thanks to more conservative banking practices and strong capitalization (CIA, 2022). Canada has a GDP per capita of $45,900 as of 2020 and AA or AAA credit ratings. This means Canada is a reliable global market contributor and stable economy.

In the category of starting a business in Canada, the World Bank’s Doing Business series on Canada from 2020 gives Canada scores from 94 to 100 on a scale of 1 to 100 in procedures, time needed, cost, and paid-in minimum capital—ranking Canada number 3 in the world for starting a business, well above the US, Japan, and Germany. Overall, doing business in Canada with considerations for many different topics such as getting electricity and paying taxes, the World Bank ranks Canada 23 in the world (World Bank, 2020).

Implications

The strong, reliable, and open market economy of Canada makes it appealing to foreign investors, and its proximity to the US gives it a unique advantage over other countries. EZEV’s business strategy in Canada would not be very different from establishing a business in the US (easier in fact) other than the factors listed above which would encourage EZEV to geographically tailor its information, domain, and languages according to the research detailed in this report.

Technological

Canada has highly developed and advanced telecom services with nearly universal LTE and broadband. Government regulation efforts have also ensured that operators have the proper resources and supportive policies to develop 5G services, improve speeds, and enable digital economy and e-services to facilitate “smart cities” (CIA, 2022). There is high value in e-commerce and international connections that are supported by both public and private sector investments. There is also an extensive broadcast media network with many different stations and satellite and cable systems to provide wide access to a wide range of media from both Canada and the US. Canada also has an extensive roadway network with nearly a million miles of roadways connecting urban and rural areas across the country. It is ranked number 8 in the world for the number of roadways (CIA, 2022).

Implications

Canadians generally have easy and affordable access to internet, media, and free information. This means that the infrastructure exists for widespread proliferation of EZEV with proper marketing strategy. Government and business data are also readily available online through Canada’s official website and other private websites that do well to track EV data, incentive information, etc. that EZEV would use to for its Canadian digital tool.

Legal

Canada has a common law system except in Quebec, where it has civil law based on the French civil code (CIA, 2022). Canada’s ten provinces and three territories which split authority between federal, provincial, or territorial governments, overlapping in some areas. Foreign investors are required to notify the Canadian government when they begin a new business activity in Canada and when they acquire control of an existing Canadian business.

There are many grants and incentives available to investors to include federal government incentives and assistance like repayable loans, tax credits, tax rebates, and technical and marketing support. The main business vehicles used are corporations, partnerships, limited partnerships, trusts, and joint ventures (Nawata et al., 2021).

There are laws protecting trademark and patents rights as well as laws regulating e-commerce and online platforms. Federal and provincial legislations recognize digital signatures and documents as legally binding contracts, and there are consumer protection laws in some provinces that apply to internet sales and distance selling. Online platforms are not currently regulated in Canada, but companies must comply with a competition law that prevents companies from boosting their own ratings or lowering the ratings of their competition by directing their own employees to rate their products or services (Nawata et al., 2021). Advertising is heavily regulated which includes provisions for prohibiting false or misleading advertising and disclosure of material connections.

Data protection is federally implemented and enforced through the Personal Information Protection and Electronic Documents Act. All provinces and territories have adopted legislation governing the collection and use and disclosure of personal information by public bodies (Nawata et al., 2021).

Implications

The strong legal system in Canada offers great protections, encouragements, and resources for businesses. Regulations can vary within provinces and territories, but overall, the laws are in place to protect business as well as consumers. This allows for anyone to operate a business with a large degree of freedom and protection. The variations in regulations may prompt EZEV to hire a lawyer for legal and tax advice when starting up. It would also be prudent to work with local contacts who are well-versed in those areas to advise on business operations and or expansion. Because EZEV’s American base is in close proximity, there may not be a need for local workers or a local office to navigate the business and legal environment. It could likely be done remotely or through intermittent trips. A lawyer would also be beneficial for navigating the registration process.

Electric Vehicle Market and Implications

Currently, only 3.3 percent of the total car registrations in Canada are EVs, which is double the number from 2020, but there is still much room for growth in the market (Canada, 2022). As discussed in the Environment section of this paper, Canada has plans for growing its EV market share to fulfill its environmental goals for the next half century.

Because the government has sights on growing Canada’s EV market share, public and private organizations should collaborate to help encourage the consumers switch to EVs. A platform like EZEV would be helpful for invigorating and informing potential EV consumers.

Domestic Competition

Other than the specific automaker websites that compare their own EV models with sleek professional looking digital tools, a few websites that could be found browsing from the US surfaced with research that provide resources and information specific to the Canadian EV market. The top web result that is comparable to EZEV’s proposed platform is Plug‘N Drive. The site is marketed as a non-profit organization committed to accelerating the adoption of EVs and providing an essential guide for EV and EV charger incentives in Canada. The organization goes beyond the digital platform by sponsoring programs like the Electric Vehicle Discovery Center for offering test driving and education to potential consumers. The website offers a newsletter membership, a blog, and information about EV incentives, available models, and links to more resources. It offers useful information, but not a comprehensive comparison tool, and it could be more user friendly and sleek in design.

Recommendations and Bottom Line

There is clearly a need from the government and society’s goals of environmental conservation for organizations to help accelerate adoption of EVs among Canadians. There is already a market for non-profit organizations, as demonstrated by Plug’n Drive, such as EZEV. There is a need, but is Canada the right environment? Canada is highly ranked in the world for starting a business, has extensive technological and roadway infrastructure, stable and free political and business environments, and a legal system that enables both business and consumer protections. Though Canada has a smaller market share compared to China and Sweden, the potential for growth is there, and the need for readily available and easy to read consumer information is needed for more to make the switch.

To help break into the market, it would be beneficial to hire a lawyer and make relationships with other businesses and EV automakers for marketing and information resources. Trips to both the French and English provinces to gauge the nuances of the cultures would be helpful for tailoring the Canadian EZEV site. More research should also be done about the local competition to see where else EZEV can distinguish itself in the Canadian market. Besides the costs of the trips, registration of the business and website domains, and legal advice, startup costs will be relatively low considering the proximity to Canada from the US. The bottom line is that Canada is a highly viable option for international expansion for EZEV.

Resources

 

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