(Ottawa) It will take four times longer than announced by the federal government before Canadian taxpayers recoup the full amount of subsidies allocated for the construction of the Stellantis-LG Energy Solutions and Volkswagen battery mega-factories in Ontario.
The Parliamentary Budget Officer (PBO) comes to this conclusion in a report released Wednesday, which focuses on investments of $28.2 billion by 2032 made by the federal and Ontario governments for the construction of Stellantis-LG Energy plants. Solutions (LGES) and Volkswagen.
“We estimate that the federal and provincial tax revenues generated by the Stellantis-LGES and Volkswagen electric vehicle battery manufacturing plants over the period 2024 to 2043 will be equal to the total amount of production subsidies,” said the PBO , Yves Giroux.
This means that “the time to recover the $28.2 billion in production subsidies announced for Stellantis-LGES and Volkswagen is estimated at twenty years, which is much longer than the less than five years mentioned by the government for Volkswagen,” he added.
Last April, when Justin Trudeau announced the investment in the Volkswagen plant in St-Thomas, Ontario, he said that the project would generate “in less than five years, economic benefits equivalent to the value of the government investment.”
His Minister of Innovation, Science and Industry, François-Philippe Champagne, who was also present at this announcement, like the representatives of Doug Ford’s government, spoke of a “home run all respects.”
In reaction to the PBO’s analysis on Wednesday, the minister argued that it obscured certain elements. According to him, the independent agent of Parliament did not take into account “the many global economic impacts on the investment chain”.
How can this discrepancy be explained?
The DPB offers this line of explanation: given the “uncertainty” as to the location of investments and production (assembly of electric vehicles, production of materials for batteries), its estimate only represents public revenue generated by the manufacturing of cells and modules.
“This contrasts with the federal government’s break-even analysis for Volkswagen, which included investments and assumed production increases in other nodes of the electric vehicle supply chain,” his document reads.
The government subsidies provided in recent months are Canada’s response to the adoption of the Inflation Reduction Act (IRA), a law of the Biden administration. Quebec’s battery industry is also propelled by public investments.
The Legault government is also preparing to unveil the largest private industrial project in Quebec: the arrival of the battery cell manufacturer Northvolt, an immense complex which should lead to the creation of some 4,000 jobs and represent an investment of approximately 7 billions.
The young Swedish company, which already counts BMW, Volvo and Volkswagen among its clients, would put down roots on the land where the Canadian Industries Limited (CIL) explosives factory was once located, on the border of McMasterville and Saint -Basile-le-Grand, on the South Shore of Montreal.
