Good morning, and thank you for the invitation, honourable members and Madam Chair, to be part of this very important study on the Inflation Reduction Act.

The Canadian Vehicle Manufacturers' Association is the industry association representing Canada's leading manufacturers of light and heavy-duty motor vehicles. Membership includes Ford, General Motors and Stellantis, which is also known as FCA Canada.

The auto industry is responsible for over $13 billion in annual economic activity, 117,000 direct jobs and 371,400 jobs in the aftermarket services and dealership networks. It's Canada's second-largest export sector, with over $36 billion in exports last year. The overwhelming majority of that, of course, was destined for the United States.

The IRA is the most significant development for Canada's auto industry since the passage of the Canada-U.S.-Mexico trade agreement. The commitment of more than $370 billion U.S. to fight climate change, including major new incentives and tax credits to support ZEV manufacturing, plant retooling, the development of a domestic U.S. supply chain from mining to battery cells, consumer supports and charging infrastructure, is really the underpinning of a new American approach to industrial policy. It must be carefully considered as Canada navigates its own transition to a zero-emissions future.

The funding included in the IRA is in addition to $110 billion U.S. in climate and energy spending that was signed into law as part of the Infrastructure Investment and Jobs Act. These two acts combined dedicate $41 billion U.S. to transportation. That includes EV adoption and things such as charging infrastructure and incentives, as well as $71 billion U.S. to advanced manufacturing. This includes EVs and battery manufacturing.

As we've heard from other witnesses, Canada may not be able to match the U.S. on a dollar-for-dollar basis when you look at the size of those incentives. We believe that incentives and policies targeted at the right segments of the EV supply chain are necessary to level the playing field. We're recommending action in three specific areas to respond to the IRA and ensure that Canada remains competitive in this transformation to electrification.

The first area is EV adoption. We will urgently need a comprehensive plan in Canada to boost EV adoption if we are to keep pace with the United States. The IRA extends consumer tax incentives for the purchase of EVs. It extends an incentive for the installation of home charging infrastructure. It introduces an incentive for used EVs and commercial vehicles. It also earmarks funding for the construction, modification or repowering of generation and transmission facilities. We're urging the federal government to develop a comprehensive plan to build a public charging network; invest in clean, affordable and reliable electricity generation and grid infrastructure; and enhance consumer incentive programs to make EVs affordable for everybody.

The second area is critical minerals. The IRA has several powerful incentives to support critical mineral investments, including a 10% advanced manufacturing tax credit for a variety of minerals. It has new criteria for the existing federal EV tax credit that specify where minerals used in EV batteries are sourced. In addition, the U.S. Defense Production Act includes measures to encourage the U.S. production of minerals required to make batteries for EVs and long-term energy storage. We recommend that the government increase funding for critical mineral production with accessible, user-friendly mechanisms to seize on the advantage that we have over the U.S. in a number of areas, including cobalt, graphite, lithium and nickel. These are all minerals that are used in advanced batteries and EVs.

The last area is batteries. The IRA puts Canadian battery production at a significant disadvantage. Section 45X, the advanced manufacturing tax credit, provides companies that manufacture battery cells and modules in the United States with an annual refundable credit of up to $45 per kilowatt hour. To give you an example of what that means, for a typical facility with 30 gigawatt hours of capacity, we're talking about an annual refundable tax credit of well over $1 billion U.S. for every single facility in the United States.

We recommend that the federal government provide supports for companies that can be leveraged and compared against the IRA's production tax credit for battery modules, cells and electrode-active materials. This could be achieved by using existing programs, such as the the strategic innovation fund. You could expand the mandate specifically for auto projects. You could increase funding. You could simplify and accelerate the approval process.

I'll conclude with that. I look forward to any questions. Thank you very much.