The Parliamentary Budget Officer estimates that the total cost of provincial and federal assistance for the manufacturing of batteries for electric vehicles in Canada will exceed government projections by $5.8 billion.
A report released Friday analyzes the costs to governments of recent agreements concluded with Northvolt, Volkswagen and Stellantis-LGES for these companies to set up manufacturing plants for batteries for electric vehicles in Ontario and Quebec.
In his report, the Parliamentary Budget Officer (PBO) sets the total cost of government aid at $43.6 billion between 2022 and 2033, or $5.8 billion more than the $37.7 billion announced by Ottawa and the provinces so far.
The report says the additional $5.8 billion represents lost tax revenue for the federal, Quebec and Ontario governments combined.
Of the total costs of $43.6 billion, 62% will be borne by the federal government ($26.9 billion) and 38% by the governments of Quebec and Ontario ($16.7 billion).
Regarding the future Northvolt plant in Montérégie, the PBO estimates the break-even point for the production subsidy, which could reach $4.6 billion, from Ottawa and Quebec at 11 years.
Yet the federal government “used the PBO methodology to estimate a nine-year break-even point based on full-rate production each year,” the report says.
“Due to its format, this estimate [de neuf ans] excludes all nodes in the electric vehicle supply chain except cell manufacturing,” the report reads.
The PBO also estimates the break-even point at 15 years for the subsidy to Volkswagen and at 23 years for the aid to Stellantis, in Ontario.