Government EV Subsidies Surpass Output of Canada’s Auto Industry

Government EV Subsidies Surpass Output of Canada’s Auto Industry
CEO of Volkswagen Group Oliver Blume (C) applauds as Prime Minister Justin Trudeau and German President Frank-Walter Steinmeier hold up EV battery cells they signed during an event on Parliament Hill in Ottawa on April 24, 2023. (The Canadian Press/Adrian Wyld)
Doug Lett

Federal subsidies for electric vehicle manufacturers now total $32 billion, which is more than twice the annual output of the entire Canadian automobile sector.

Cabinet has approved a $322 million subsidy to Ford and its two South Korean business partners to make electric battery parts in Becancour, Quebec. On top of the federal subsidy, Ford and its associates—South Korea’s EcoPro BM and SK On Co.—will get a $322 million “partially forgivable loan” from the Quebec government, according to Blacklock’s Reporter.

A news release from Innovation, Science and Economic Development Canada on Aug. 17 said the project will create more than 345 jobs. “It’s pretty remarkable what we have achieved in just a few months,” said Industry Minister Francois-Philippe Champagne when announcing the subsidy.

Ford also received a $295 million subsidy in 2020 to build electric cars at an existing plant in Oakville, Ontario.

Since April, cabinet has approved $16.3 billion in subsidies to Volkswagen to build an electric battery plant in St. Thomas, Ontario. Another $15 billion was awarded to Stellantis to operate battery factories in Windsor and Brampton, Ontario. Total industry subsidies amount to almost $32 billion.

Ottawa maintains that all costs will be recovered, but no figures confirming that forecast have been provided.

By comparison, Canada’s automotive manufacturing industry added around $12.5 billion to the economy in 2020, according to Innovation, Science and Economic Development Canada.

In May, the deputy minister of the industry department, Simon Kennedy, told the Senate Banking Committee that cabinet had little choice but to subsidize the electric vehicle (EV) industry.

“The argument is this is an entire industry,” Mr. Kennedy told the committee.

“If Canada is not able to successfully make that transition, not just the handful of companies that make the cars will arguably disappear, but the entire cluster will disappear, which is hundreds of thousands of jobs.”

He pointed to Canadian companies like Magna, Martinrea, and Linamar that supply parts to vehicle manufacturers.

The plant in Becancour will produce about 45,000 tonnes per year of cathode active materials for use in batteries for Ford’s EV manufacturing. The total value of the project is around $1.2 billion.

The plant will be part of what Quebec is calling “La Vallée de la Transition Énergétique,” which is the third innovation zone in Quebec. It also includes the cities of Trois-Rivieres and Shawinigan.

The zone will focus on the battery industry, transport electrification, hydrogen, and industrial-port decarbonization.