Canadian politicos and auto executives are defending the federal government’s decision to hand out tens of billions of dollars in subsidies for foreign companies to build electric vehicle battery plants in southern Ontario..The latest to come with cap in hand is Amsterdam-based auto giant Stellantis, which is reportedly demanding the same treatment German manufacturer Volkswagen got to resume construction of an EV battery plant in Windsor..Stellantis and South Korean partner LG announced the factory last year, but halted construction while they negotiate a sweeter deal from the Liberal government. They received $1 billion from the Ontario and federal governments when it was announced in March, 2022 and now they want more..The companies are seeking the equivalent of what they would receive under US President Joe Biden’s Inflation Reduction Act (IRA) if they built it across the river in Detroit..And if Volkswagen is any example, that could be at the least $13.5 billion in government handouts over 10 years on top of the $5 billion construction cost, and possibly even more..According to John Hopkins University professor Bentley Allan, the final price tag to secure the plant could be well over $19 billion, even though the Stellantis plant is smaller than Volkswagen’s..“That’s just what the math says,” Allan, who has studied the IRA and how the subsidies compare to Canadian policy, told the Financial Post..“If you take Stellantis’ public announcements, and you calculate it by the full value of the IRA for cells and modules, you get $19 billion.”.Biden was accused by US trading partners of sparking a green trade war with the IRA and lavish subsidies for EVs. It’s become a race to the bottom for desperate governments like Ontario to attract investment into its auto sector..On Thursday, Ontario Premier Doug Ford committed to pay a third of the cost to save the plant and demanded the Feds do the same..“I’m urging them to do what’s necessary to secure this,” Ford said Thursday. “I know everyone’s anxious for the deal and I am as well.”.On Wednesday, Industry Minister Francois-Philippe Champagne said the parties were close to an agreement..In contrast, the Canadian Taxpayers Federation called on Ottawa to reject what it called “corporate welfare.”.“If you hand out billions of dollars in taxpayer cash to one auto company, of course the others will follow,” said Jay Goldberg, the CTF’s Ontario director. “Taxpayers can’t afford to throw money at every company under the sun and Ottawa needs to say no before it wastes billions more.”.“Ford is wrong to be pushing to give Stellantis even more money,” he added. “Both governments need to end their addiction to corporate welfare; if governments want to support business, they should cut corporate taxes to save money for the locally owned corner store and not just multi-national corporations.”.Brian Kingston, president and CEO of the Canadian Vehicle Manufacturers’ Association, said governments on both sides of the border had little choice but to provide the handouts to lure North American EV assemblers away from Asia, and specifically China. If Canada doesn’t follow suit, Biden will..“If you don't compete with the Americans, every single facility will go to the United States,” he says. “We have a unique, once-in-a-lifetime chance to increase our share of the industry.” .Stellantis’ many brands include Chrysler, Doge, Jeep, Fiat, Peugeot, Citroen and Maserati.
