OTTAWA—Canada’s EV-building strategy could cost taxpayers some $6 billion more than the private companies themselves are investing, the federal parliamentary budget watchdog says.
A new report released Tuesday by Parliamentary Budget Officer Yves Giroux says a total of $46.12 billion in private investment across the nascent electric vehicle supply chain has been announced.
The PBO estimates the total public support exceeds that — pegging capital and operating subsidies offered by federal and provincial governments at up to $52.45 billion, which is $6.33 billion or 14 per cent higher.
Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, said the parliamentary officer has inflated the figures by including $38.64 billion in federal and provincial production subsidies that are only a cost to government if the companies manufacture products in Canada.
Plus, that economic activity creates jobs and generates new tax revenue, he said.
“I’d be embarrassed to put future production subsidies into this equation after having been schooled repeatedly on how they actually work,” said Volpe, who has worked closely with Prime Minister Justin Trudeau and Premier Doug Ford on the EV push that is a cornerstone of Ontario’s industrial strategy.
“These reports might be more useful if they tried consulting the industry they repeatedly report about,” said Volpe.
The PBO looked at the announcements of 13 projects since 2020, mostly in Ontario — where Honda, Stellantis-LG, and Volkswagen are among the largest — along with the Northvolt project in Quebec.
Those have drawn the biggest government subsidies to match U.S. incentives and to kick-start “clean energy” manufacturing in Canada.
Overall, Ottawa is paying the bigger public portion, which means provinces need a willing federal partner to ensure continuity in funding for scaling up an EV supply chain industry here to keep pace with the U.S.
“We estimate federal government support to be up to $31.4 billion (60 per cent) and provincial government support to be up to $21.1 billion (40 per cent),” said the report.
So far, the Trudeau government has placed big bets on the EV manufacturing future in Canada, while federal Conservative Leader Pierre Poilievre has been, at best, noncommittal.
A spokesman for Poilievre did not directly address the question Tuesday. Sebastian Skamski in an emailed reply criticized Trudeau for handing out “multi-billion dollar taxpayer funded payouts to giant, profitable, multinational companies with absolutely no guarantees for Canadian jobs.”
It said Conservatives under Poilievre would make sure taxpayer dollars are “used wisely” and taxpayer-funded jobs are given to Canadians, not foreign replacement workers.
Poilievre has previously asked the PBO to analyze the costs to taxpayers, and been critical of projects that drew temporary foreign workers to set up complex technical machinery and processes.
The federal support comes via investment tax credits ($2.5 billion) at the front end of projects, and once plants are up and running and producing EV batteries and parts, via production subsidies, which are based on actual output. The PBO estimates production subsidies will cost the federal government $24.36 billion, which he said includes foregone corporate income tax revenue.
The federal government is providing $4.4. billion in construction and other support as well.
On the provincial side, the watchdog said production subsidies will cost $14.28 billion, along with $6.7 billion in construction and other support.
The federal Liberal government and Ford’s provincial Tories have argued they are making strategic investments to match incentives provided by U.S. President Joe Biden to lure EV auto and parts manufacturers stateside.
On Tuesday, the premier was in remote Greenstone, 1,200 km northwest of Toronto, to announce partnerships with Animbiigoo Zaagi’igan Anishinaabek, Aroland First Nation, Ginoogaming First Nation and Long Lake #58 First Nation.
“I’m thrilled to announce that we’ve signed a new historic agreement with the four First Nations in the Greenstone area to support long-term growth and prosperity in northern Ontario,” said Ford, who wants minerals mined in the north to be used in EV batteries manufactured in southern Ontario.
“This renewed partnership provides funding to drive economic development to build and upgrade the roads that improve access to critical mineral and resource development opportunities and to help connect First Nations communities to essential services,” he said.
At Queen’s Park, Economic Development Minister Vic Fedeli’s office said the PBO report “reinforces the significant long-term benefits the Stellantis-LG Energy Solutions and Volkswagen investments will bring to the province.”
“It also acknowledges that it only analyzed a fraction of the benefits gained from the investments,” said Vanessa De Matteis, Fedeli’s press secretary.
“These projects will create tens of thousands of good-paying direct and indirect jobs and community infrastructure benefits, like improvements to roads, highways, and police and fire services, as we establish an end-to-end electric vehicle supply chain right here in Ontario.”
Editor’s note: This is an updated version to clarify that the PBO report indicates government costs are higher than the announced investments by the companies.
