It will take Canada 20 years to recover Stellantis and Volkswagen subsidies – the watchdog

A site shows the site where the massive factory to produce electric vehicle batteries will be built by Volkswagen Group’s battery company PowerCo SE in St. Thomas, Ontario, Canada on April 21, 2023. REUTERS/Carlos Osorio/File image gets license rights

Sept 12 (Reuters) – The Canadian government will take 20 years to recover the total C$28.2 billion ($21 billion) subsidy it is providing to Volkswagen and Stellantis-LG Electric Solutions (STLAM.MI) to build two batteries for electric vehicles. The country’s budget watchdog said on Tuesday.

Canada, home to a large mining sector for metals including lithium, nickel and cobalt, is offering generous incentives to compete with the United States to attract battery makers to set up factories in the country, as it seeks to emerge as a major hub for electric vehicle supplies. series.

Parliamentary budget officer Yves Giraud predicted that the combined revenues generated by manufacturers will only match production subsidies by 2043, if production begins in 2024. Government subsidies are expected to end by 2032.

When Volkswagen announced the plant in April, Prime Minister Justin Trudeau said the economic impact of this project “will be equal to the value of the government investment in less than five years.”

In May, Stellantis stopped building an electric vehicle battery plant in Windsor, Ontario, saying the Canadian government was not providing committed subsidies. The dispute was resolved after two months of bargaining when the government agreed to provide subsidies similar to those it had provided to Volkswagen.

Canadian Industry Minister Francois-Philippe Champagne said in a statement on Tuesday that the watchdog’s report does not address many of the broader economic impacts on the supply chain. He added that the report highlights that these investments will generate “far greater” economic benefits than the government’s contribution.

Together, the Canadian federal government and the Province of Ontario provided up to C$15 billion in performance incentives for Stellantis-LG Energy Solution, C$13 billion in manufacturing tax credits and a C$700 million grant to attract Volkswagen.

($1 = 1.3557 Canadian dollars)

(Reporting by Urvi Dugar in Bengaluru and Divya Rajagopal in Toronto – Prepared by Mohammed for the Arabic Bulletin) Editing by Josie Kao

Our Standards: The Thomson Reuters Trust Principles.

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Divya Rajagopal reports on Canada’s mining sector, covering breaking news on critical mineral deals, mining takeovers and mergers, how miners are addressing climate change and environmental, social and governance imperatives. Divya previously worked as a financial journalist at Economic Times and CNBC TV18 based in India. She holds a Master’s degree in Global Affairs from the University of Toronto and a Master’s degree in Technology and Social Change from Lund University, Sweden.

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