Flavio Volpe has been leading the Auto Parts Manufacturers' Association of Canada since 2014. The sector had struggled in the aftermath of the 2008 financial crisis and the bailouts required to save it. A decade later, he’s seen investments boom, lured by generous federal and provincial subsidies. Today, the auto sector is facing a potentially existential threat from U.S. tariffs. Now, he thinks, is the moment for something bold and different: building a truly Canadian-owned-and-operated automaker. He spoke with TVO Today about why, how, and why now.
John Michael McGrath: We’re talking about this at a moment of sensitivity to the idea of economic sovereignty. You spoke with the Globe and Mail last week, proposing a feasibility study to see if Canada can support a truly domestic automaker. Why now?
Flavio Volpe: Number one is that we’re under threat. We've all had to spend the last number of months defending our sovereignty and talking about becoming more economically resilient. The prime minister has challenged us to be more ambitious. Well, there's nothing more ambitious than a Canadian car company. We spent the last two years prior to Trump's re-ascension to the throne landing about $50 billion worth of new investment in vehicle production and battery production, and various critical parts of the supply chain here in Canada. I’ve been one of the people arguing Canada is the best place in the world to make cars profitably: we have access to some of, if not the, best customers in the world and a complete supply chain.
We built our own demonstration vehicle, a 100 per cent start-to-finish Canadian project design, engineered and built with Canadian components, an operating vehicle prototype called Project Arrow. So, all of these things come together and you say: Well, how do you build insurance against future Trump shocks? The companies that make cars here take their orders from Detroit or Wolfsburg or Tokyo or Nagoya, and you see them all trying sincerely to juggle the current threats against their long-term commitment to this province or to this country.
McGrath: What is stopping someone today from actually doing this? You mentioned project Arrow – it’s possible to build a car entirely in the Canadian supply chain, but nobody is doing it. Is it a lack of money? A lack of ambition? Are suppliers tied to relationships with existing automakers?
Volpe: Well, we're all in a six or seven per cent business, and all of that business has been threatened by a 25 per cent tariff. There’s nobody whose balance sheet as a supplier is big enough to become an automaker by themselves. And if you did, your automaker customers might not look kindly on you being a competitor. So, you might lose your parts business over the idea of becoming an automotive supplier. Right? It requires a lot of capital, billions traditionally, to launch a product that's a viable product for market. All of those companies that I talked about, including the existing companies like the Detroit Three, the biggest Japanese, European, and Korean players — they all have very strong relationships with their governments.
The reason this is a noble idea now is there are hundreds of thousands of people whose livelihoods are tied up in the Canadian automotive sector who are being arbitrarily targeted by the most powerful office in the world who don't have an opportunity to shift to something else. You're not going to go from making parts and cars and tools to running restaurants or designing video games or being an accountant or a teacher. This is your career. What can we do for those people? Canada doesn't just have an incredible cluster for automotive manufacturing. We have a world class cluster for advanced technology — AI and machine learning are so important in automotive right now, and they were both born here. So let's let's try and play to our strengths.
McGrath: The skeptic would say this would be a minimum $1 billion flop. The idea that a Canadian company could go toe-to-toe with the big American companies, not to mention European and Asian competition — well, not to be blunt, but it’s kind of like dreaming in Technicolor.
Volpe: Well, I believe in us first. I've sold us around the world, and I've sold us through Project Arrow and every other iteration of my career in automotive as the place to make the best cars in the world. If those arguments are true and those arguments are successful in landing $50 billion worth of new investment from automakers around the world, how could they not be true for us? I choose to try harder to extend our arms further than the usual old men who say: Nah, can't be done. Hasn't been done. It's too hard.
Well, in fairness, that's exactly why we're vulnerable right now.
There are 100 million cars made every year, but you can make a go of it with 100,000 cars a year. Just a tenth of a per cent to do it. Ferrari makes 11,000 cars a year. Toyota does 10 million. You just have to do the research, find the right market segment.
Why is Mexico, which is not a G7 country, which has 100 years less experience in making cars than us, which doesn't have a AAA rating, which doesn't have the critical minerals or the advanced sciences cluster that we do, doesn't have the tooling that we do, doesn't have the steel and aluminium that we do — why does Mexico think so highly of the idea that it’s launching its own car company? Maybe instead of listening to the old men in Ontario, we should listen to the young woman who's running that country.
McGrath: You’ve mentioned Project Arrow a few times. Is this idea of a Canadian automaker an easier sell because of the groundwork you’ve already done in proving we’ve got the supply chain here?
Volpe: Well, let me clarify. Arrow 2.0 is a technology demonstration. I think we need to look at: what’s the right model and the right market segment we could enter. That’s not necessarily going to be Arrow. In fact it probably isn’t. But Arrow has given us the legitimacy, the proof point to be able to say to people in this conversation: it can be done by Canadians. It may turn out the best way forward is something like Slate, which Jeff Bezos is backing. And if that’s the case, hey, there’s no egos here. Arrow can be — well, not to blaspheme, but Arrow could be the John the Baptist in this story. The one who showed the way.
McGrath: You’re obviously proposing this at a moment when the Canadian auto sector faces a kind of existential threat from Trump and his tariffs. It’s at least possible that a few months from now the President wakes up one morning and decides that this has all been a big mistake and we can all breathe a sigh of relief and go back to normal. Maybe that’s not the most likely! But it’s possible, and if we got back to normal, do you think the argument for a Canadian automaker goes away?
Volpe: I think it's very possible that we regain access to the U.S. market in a way that looks like it was before Trump’s re-election. We better have learned from that. We better have learned how we were vulnerable and planned differently for it. We treat money differently since the great financial crisis of 2008; we don’t do everything the same as we did. Same with the pandemic. What did we learn about public health, about workforces? Are we just going to go back to doing the same thing?
The auto sector has a responsibility to do things differently because if we get into this situation again, how many Canadians are going to sympathize with us? How many Canadians will agree to support the industry, if we don’t change? If I’m a canola farmer in Saskatchewan who’s suffering because we imposed tariffs on Chinese vehicles to help protect Ontario’s auto sector — I wouldn’t want to hear about it. That farmer is suffering now because of a consequence of national policy and he’s going to have zero sympathy for us if we end up back at the brink. He’s gonna say: I pay my fair share and I don’t want to support central Canada’s manufacturers. We’ve protected them and they’ve become complacent.
You know, I started this job in 2014, and I couldn’t get my own dog to bark at me. The auto sector was a leper, rust-belt, in decline. All that. I was drawn to the job because I’m a car guy, I love the product. We have something absolutely special here, we’ve been building cars for over 110 years. I think this is one of those moments where all those people in advanced manufacturing need to take a step forward together, to create a point of pride for Canadians, to not be complacent.
I’m a Canadian first, I’m a car guy second. I’m very proud of who we are as a country and where we excel. I get to sit in the stands and cheer on our tech sector, our agriculture sector, mining, uranium, oil and gas — our health-care sector, our researchers. We watched our health-care workers demonstrate an incredible amount of bravery for the common good during the pandemic. If all those people went to work and they’re not complacent, and in the auto sector we’re asking them to support us with their taxes but the industry is too afraid to try and join the big leagues — well, I wouldn’t stand for it.
This interview has been edited for length and clarity.
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