The cost of subsidizing new EV battery plants keeps going up.A new report from the Parliamentary Budget Office released on Friday now pegs the total tab to support EV battery manufacturing by Northvolt, Volkswagen and Stellantis to be $43.6 billion over the next 10 years or $5.8 billion higher than the Liberal government’s $37.7 billion announced outlay.Based on projected annual production schedules, it would take 15 years for the government to recoup its $13.2 billion from Volkswagen and 23 years for the $15 billion sunk into Stellantis, PBO said..“Our estimates of the break-even timelines for the production subsidies are based on several optimistic assumptions,” it said.Parliamentary Budget Office report.However, the report notes those are just estimates — total costs haven’t been publicly released.“These announcements have largely been made in isolation and an estimate of the total cost of support has not been publicly provided,” it said.The total announced taxpayer “support” to date includes production subsidies of $32.8 billion and another $4.9 billion in construction costs. Not included are additional 'unannounced' costs associated with manufacturing the batteries themselves.Of those ‘announced’ figures, $26.9 billion — or 62% — will be incurred by the federal government while $16.7 billion will be split between the governments of Ontario and Quebec.Assuming the program is funded with deficit financing — as it surely is — public debt charges for both provincial and federal governments tack another $6.6 billion onto the growing tab, now approaching $50 billion..But that’s not all.The subsidies were meant to lure the companies from locating to the US. But the PBO estimates maintaining equivalency with the Biden administration’s Advanced Manufacturing Production Credit results in about $5.8 billion in foregone tax revenue over the next 10 years.“Our estimates of the break-even timelines for the production subsidies are based on several optimistic assumptions,” it said. “It is certainly possible that the break-even timelines for the production subsidies exceed our estimates.”Including other costs — construction, foregone revenues and debt servicing — “would further extend break even times,” it added..“The PBO report is proof taxpayers shouldn’t trust politicians when they promise the moon and the stars on corporate welfare deals,”CTF Ontario Director Jay Goldberg.Predictably, the Canadian Taxpayers Federation (CTF) was appalled at what it termed an egregious example of “corporate welfare.”Said CTF Ontario Director Jay Goldberg: “Governments have a terrible track record on corporate welfare and there’s a real risk these overruns will soar even higher.”“The PBO report is proof taxpayers shouldn’t trust politicians when they promise the moon and the stars on corporate welfare deals,” Goldberg continued. “Given the awful track record governments have on corporate welfare deals, taxpayers are most likely to break even somewhere between 23 years from now and never.”
The cost of subsidizing new EV battery plants keeps going up.A new report from the Parliamentary Budget Office released on Friday now pegs the total tab to support EV battery manufacturing by Northvolt, Volkswagen and Stellantis to be $43.6 billion over the next 10 years or $5.8 billion higher than the Liberal government’s $37.7 billion announced outlay.Based on projected annual production schedules, it would take 15 years for the government to recoup its $13.2 billion from Volkswagen and 23 years for the $15 billion sunk into Stellantis, PBO said..“Our estimates of the break-even timelines for the production subsidies are based on several optimistic assumptions,” it said.Parliamentary Budget Office report.However, the report notes those are just estimates — total costs haven’t been publicly released.“These announcements have largely been made in isolation and an estimate of the total cost of support has not been publicly provided,” it said.The total announced taxpayer “support” to date includes production subsidies of $32.8 billion and another $4.9 billion in construction costs. Not included are additional 'unannounced' costs associated with manufacturing the batteries themselves.Of those ‘announced’ figures, $26.9 billion — or 62% — will be incurred by the federal government while $16.7 billion will be split between the governments of Ontario and Quebec.Assuming the program is funded with deficit financing — as it surely is — public debt charges for both provincial and federal governments tack another $6.6 billion onto the growing tab, now approaching $50 billion..But that’s not all.The subsidies were meant to lure the companies from locating to the US. But the PBO estimates maintaining equivalency with the Biden administration’s Advanced Manufacturing Production Credit results in about $5.8 billion in foregone tax revenue over the next 10 years.“Our estimates of the break-even timelines for the production subsidies are based on several optimistic assumptions,” it said. “It is certainly possible that the break-even timelines for the production subsidies exceed our estimates.”Including other costs — construction, foregone revenues and debt servicing — “would further extend break even times,” it added..“The PBO report is proof taxpayers shouldn’t trust politicians when they promise the moon and the stars on corporate welfare deals,”CTF Ontario Director Jay Goldberg.Predictably, the Canadian Taxpayers Federation (CTF) was appalled at what it termed an egregious example of “corporate welfare.”Said CTF Ontario Director Jay Goldberg: “Governments have a terrible track record on corporate welfare and there’s a real risk these overruns will soar even higher.”“The PBO report is proof taxpayers shouldn’t trust politicians when they promise the moon and the stars on corporate welfare deals,” Goldberg continued. “Given the awful track record governments have on corporate welfare deals, taxpayers are most likely to break even somewhere between 23 years from now and never.”
