(OTTAWA) The Trudeau government rolled out a silky red carpet in front of Volkswagen to convince company executives to locate its mega-plant making batteries for electric vehicles in Canada instead of the United States.
In all, the federal government has pledged to provide grants that could total $13 billion over 10 years to the German automaker to induce it to establish its first plant outside the European continent in Canada, specifically in St. Thomas, Ontario.
Ottawa has also agreed to contribute up to 700 million to the construction of this plant which will occupy an area of 350 football fields, the equivalent of the area occupied by Pearson International Airport in Toronto, confirmed a government source. at La Presse.
The IRA, which has an envelope of 370 billion US dollars to support projects aimed at combating climate change and accelerating the energy transition, has become a source of concern in several countries because of its power of attraction to large companies.
The amount of the Canadian financial boost, which had still not been disclosed nearly a month after Volkswagen confirmed it would set up shop in St. Thomas, was first reported by Bloomberg. Prime Minister Justin Trudeau and Minister of Innovation, Science and Industry Francois-Philippe Champagne are to confirm details of the federal government’s investments during a press conference this Friday in St. Thomas.
The Ontario government must also specify this Friday the details of the subsidies it has put on the table to attract Volkswagen to its territory. St. Thomas is approximately 200 kilometers northeast of Detroit and is an important part of the automobile corridor that exists between Canada and the United States.
“This is an investment that will have economic benefits for the next two or three generations,” said a government source, who requested anonymity because she was not authorized to speak publicly on the matter.
In addition, the payment of the grants will be subject to the continuation of the IRA in the United States. If a new administration decides to ax this generous program, Canadian grants will also end.
“It’s at the heart of the agreement with Volkswagen. The company will not receive a subsidy until the production of the batteries and their sale has started,” said a government source.
Over the past few weeks, Mr. Champagne has argued that the Trudeau government must respond to the ERI to the extent of its means if Canada is to remain competitive and can attract its fair share of energy transition investments.
“What we have set ourselves as a goal is to remain competitive with what is happening in the United States, but selectively,” commented the minister last month in Montreal, while acknowledging that we “can’t do everything”.
“It took me months of work to convince our European partners that Canada is the perfect place for the transportation electrification sector,” the minister said at an event in Montreal on last month.
In an interview with Bloomberg, Champagne said the Trudeau government was also in talks with LG Energy Solution and Stellantis NV for financial assistance for the construction of a plant, also in Ontario.
According to calculations by the Ministry of Industry, Canada and Ontario have attracted more than $17 billion in investment from automakers and suppliers of electric vehicle batteries and battery components since 2020.
Last month, the leader of the Conservative Party, Pierre Poilievre, denounced the lack of details about the financial effort that the Trudeau government had made to convince Volkswagen to set up its plant in Canada.