'Nobody's sleeping': Canada's auto industry is at a crossroads, says Flavio Volpe

National Observer

24-04-2025

One of Flavio Volpe's clearest childhood memories is sitting in the driver's seat of a rosso corsa – racing red – Ferrari Testarossa at the 1986 Canadian auto show in Toronto. The 10-year-old boy who grew into a self-confessed 'car guy' now holds the top job at the Automotive Parts Manufacturers' Association (APMA), among the most influential industrial lobby groups in Canada.
'I had never seen anything like it. My father convinced the guy to let me sit in the car… blew my mind,' Volpe, 49, told Canada's National Observer. 'I was terribly inspired – still am.'
But Volpe's lifelong romanticism for cars is today matched by a steely-eyed realism about the cross-roads that Canada's 120-year-old auto industry finds itself at.
Desperately trying to safeguard thousands of assembly line jobs in a sector sideswiped by US tariffs on one hand, while at the same time labouring to get gears meshing on a national EV industrial ecosystem, these are difficult days — and nights.
Just ask any of the 200-plus APMA companies that are supplying global automakers, including Ford, General Motors, Stellantis, Honda and Toyota, with parts, tooling, automation, AI software, advanced materials, critical minerals and EV battery technology.
'Nobody's sleeping,' Volpe said of his members' reaction to the 25 per cent tariffs imposed this month by the US to strong-arm automakers into moving their production lines south.
The Trump-initiated levies have already forced 10,000-12,000 'temporary' layoffs among APMA members, Volpe said, as the seismic shock of the tariffs resonates throughout the wider industry.
Stellantis sent home 3,000 workers after closing its Windsor, Ont. assembly plant where it manufactures Chrysler Pacifica minivans and electric Dodge Charger pony cars — and also temporarily laid off 900 employees at its US facilities.
General Motors, meanwhile, shuttered its CAMI plant in Ingersoll, Ont., home to its Brightdrop Zevo electric delivery van, leaving 500 employees out of work.
'There are slowdowns and shutdowns for manufacturers on both sides of the border. That's not good,' Volpe said, noting that about half of Canadian-made auto parts are delivered to US plants.
It could get worse still on May 3 as more US tariffs are levied on $20 billion worth of auto parts from Canada annually, and $80 billion from Mexico.
'That's a $5 billion surtax on the [Canadian] auto parts that American manufacturers need for just-in-time assembly. All it will take is 48 hours and nobody has a car,' he said of a potential supply chain shutdown.
"Regardless of Trump, the global fleet will be electrified within 20 years — or at least EV and plug-in hybrids."
'What is keeping the Canadian auto parts business alive right now is that we are still shipping 49 per cent of what we make south of the border — even with the US tariffs,' Volpe said. 'May 3 might change that.'
'It's been hectic'
Many Canadians will recognize the bearded Toronto native as a frank and staunch defender of the country's auto industry. During the tariff turmoil, Volpe has been particularly high-profile, averaging 30 requests a week for media interviews. 'It's been hectic,' he said.
Volpe — who has a degree in international relations from the University of Toronto and an MBA from the Schulich School of Business — also moves smoothly through federal and provincial political circles.
During a parliamentary committee hearing last year where he was introduced as 'a regular,' Volpe reinforced his reputation for colourful oratory when he compared China's trade actions to major league baseball player Barry Bonds' use of performance-enhancing drugs.
Three years after taking over the APMA, he played a key role in Canada's effort to renegotiate the North American Free Trade Agreement with the first Trump administration in 2017. And after Trump was reelected in 2024 and threatened to impose crippling tariffs and annex its northern neighbour, Volpe was named by Justin Trudeau to the Prime Minister's Canada-US Relations Council.
"Everybody says, well, Washington's not your friend. It's true. I'm one of the first people to say we'll never trust them again," Volpe said. "But we will do business with them again. We will negotiate market access again."
The Canadian auto industry's wheels have been wobbling since Trump returned to the White House, with Prime Minister Mark Carney unveiling a $2 billion strategic response fund last month to develop an 'all-in-Canada' sector supply chain to lessen dependence on the country's southern trading partner.
However, major doubts still hang over the long-term future of Canada's auto manufacturing heartland in Ontario.
EV future on low charge
Talk of protecting the automotive supply chain and its 125,000-plus workers, though important — not least in a federal election campaign — distracts from the wider damage being done by the trade war to the sector's fast-approaching future — EVs.
Honda is ostensibly sticking to its pledge to invest $15 billion in building an EV supply chain in Ontario, and Volkswagen-owned PowerCo is inching ahead with a planned battery plant, but both appear to be in wait-and-see mode as they assess the impacts from US levies on the auto sector.
Canada's $100 billion EV industrial strategy was already facing setbacks as automakers idled projects due to slumping domestic demand and battery firms struggling with ever-tighter margins in a global market dominated by Chinese rivals.
There's no ignoring the headwinds buffeting Canada's nascent EV sector, Volpe said, but the current slowdown is 'not changing anything in the long run.'
'Regardless of Trump, the global fleet will be electrified within 20 years — or at least EV and plug-in hybrids,' he said.
Automakers are revisiting their EV development plans not because gas-powered vehicles are 'better,' said Volpe, but because the financial pressures today make staying with familiar internal combustion engine technology less risky.
'If I launched a car today, it wouldn't combust anything. It would be electric,' he said. 'The rest of the world is going there — except, it seems, for the US, which is creating a market island for itself in which there will be full-sized pickups burning gas for 40 years.'
When Volpe says 'if' he launched a car, it's not armchair industrial analysis. As CEO of APMA, he spearheaded the development of Project Arrow, a potentially revolutionary EV designed in Canada and built entirely of parts sourced from Canadian suppliers.
'All-Canadian car'
The $20 million pilot in development since 2020, as Volpe stressed, is 'not about prototyping a design for mass production.'
'With Project Arrow, Canada shows it has the technology and the people to do an 'all-Canadian' car.'
Rather, the car — named after the pioneering but controversial Canadian-built Avro Arrow supersonic fighter jet cancelled in 1959 — is meant to function as a 'platform and showcase' for 25 home-grown EV technologies, including an innovative electric drive-train, 3D-printed chassis, and state-of-the-art navigation system.
'Through Project Arrow we will prove that [in auto sector terms] we can land on the moon. But it is not for APMA to colonize it,' said Volpe, noting he has had many requests to launch a car company off the back of the prototype.
'We have five years of design and engineering work for anyone who wants to take a shot at [commercial manufacturing] it,' he said.
This would likely include a role for the soon-to-be-elected federal government. Both Liberal and Conservative parties approached Volpe to ask 'what they could promise' about the Arrow's commercial future, but he declined to take sides in the federal election campaign.
'We say: 'You have our notes, our industry network, the prototype, all our ideas. After April 28 it's up to you to action it.''
'With Project Arrow, Canada shows it has the technology and the people to do an 'all-Canadian' car,' Volpe said. He added that the prototype was earning its keep on the global trade show circuit, with the industrial publicity translating into international contracts worth $500 million for the Arrow's Canadian parts suppliers.
Volpe underlines that Project Arrow, which has just landed federal and provincial funding to build its first 11 cars, could help shift Canada's current EV strategy away from its historical reliance on 'dynamics created by Washington' by prompting a fresh look at Canada's strengths in the auto sector.
He lists off Canada's existing world-class automotive industrial manufacturing clusters, advanced software and AI technologies, raw materials including steel and aluminum as well as the critical minerals and rare earths that are core to EV batteries.
'Things are changing very rapidly. This is an occasion for a big rethink of the auto sector canon. We can't continue to think conventionally,' Volpe said of the transition to EVs.
He reckons a compact SUV based on the latest model Arrow could roll off a Canadian assembly line by 2029 with a sticker price of $35,000, ready to be one of the two million cars sold each year in Canada.
"This is an occasion for a big rethink of the auto sector canon. We can't continue to think conventionally."
More competitively priced EVs could help car dealers lure the next generation of EV buyers who may have been deterred by expired federal incentives and waning provincial subsidies.
Statista, a data provider, expects Canada's EV market to reach over $11.5 billion in 2025 and grow almost 10 per cent a year to $17 billion by 2029, by which time almost 250,000 EVs will be on Canadian roads.
'By then, we will have an entirely different relationship with our cars,' said Volpe.
'Transportation pods'
The automotive industry has transformed society over the past 120 years and driven the construction of modern highways and infrastructure to allow people to commute and connect easily from suburbs to cities and beyond.
'Cars no longer have the role of connecting people in the same way they did. When we were younger you needed a car often to see your friends. Now my kids can see their friends on this,' Volpe said, pointing to his cell phone.
Though he believes in the future there will be no shortage of car enthusiasts who still desire to drive iconic gas-powered vehicles such as the Testarossa, this won't be how car companies turn a profit.
'They will make money by developing transportation 'pods' that carry human beings where they want to as easily as cell phones connect us to the stuff we want,' said Volpe.
'We once romanticized manual transmissions — you were a 'real man' if you drove a stick. Now the greatest supercars in the world are electric; no-one shifts anything.'
In Volpe's vision of the future, it will be more about 'how 'cool' a transportation pod is, how accessible, affordable, reusable … is it fully autonomous?'
'At the 60th Canadian auto show [in 2034], we could be looking at many more Canadian cars and they will all be EVs.'