(OTTAWA) The Trudeau government has rolled out a silky red carpet in front of Volkswagen to convince the company’s executives to locate its mega-plant making batteries for electric vehicles in Canada instead of the United States.
In all, the federal government has pledged to provide subsidies that could total $13 billion over a 10-year period to the German automaker to encourage it to establish its first plant outside the European continent in Canada, specifically in St. Thomas, Ontario.
Ottawa has also agreed to contribute $700 million to the construction of this plant, which will occupy an area of 350 football fields, the equivalent of the area occupied by Pearson International Airport in Toronto, a government source confirmed. To The Press.
The financial effort made by the Trudeau government was intended to compete with theInflation Reduction Act (IRA) adopted by the administration of President Joe Biden in Washington.
The IRA, which has an envelope of 370 billion US dollars to support projects aimed at combating climate change and accelerating the energy transition, has become a source of concern in several countries because of its power of attraction. to large companies.
The amount of the Canadian financial boost, which had still not been disclosed nearly a month after Volkswagen confirmed that it would set up shop in St. Thomas, was first reported by the Bloomberg agency. Prime Minister Justin Trudeau and Minister of Innovation, Science and Industry Francois-Philippe Champagne are due to confirm details of the federal government’s investments during a press conference this Friday in St. Thomas.
The Ontario government must also specify this Friday the details of the subsidies it has put on the table to attract Volkswagen to its territory. St. Thomas is approximately 200 kilometers northeast of Detroit and is an important part of the automobile corridor that exists between Canada and the United States.
“It’s an investment that will have economic benefits for the next two or three generations,” said a government source, who requested anonymity because she was not authorized to speak publicly about the issue.
Under the agreement between Volkswagen and the federal government, the German car giant will receive part of the subsidies annually only after the production and sale of batteries for electric vehicles has started.
In addition, the payment of the grants will be subject to the continuation of the IRA in the United States. If a new administration decides to ax this generous program, Canadian grants will also end.
“It’s at the heart of the agreement with Volkswagen. The company will not receive a subsidy as long as the production of the batteries and their sale have not started,” said a government source.
Canada’s Place in the Transition
In recent weeks, Mr. Champagne has said that the Trudeau government must respond to the IRA at the height of its means so that Canada remains competitive and can attract its share of investments linked to the energy transition.
“Our objective is to remain competitive with what is happening in the United States, but selectively,” commented the minister last month in Montreal, while acknowledging that we “can’t do everything”.
Volkswagen’s decision to move to St. Thomas instead of the United States was described by Mr. Champagne as “a home run for Canada.”
“It took me months of work to convince our European partners that Canada is the perfect place for the transport electrification sector,” said the Minister during an event in Montreal on last month.
In an interview with the Bloomberg agency, Mr. Champagne indicated that the Trudeau government was also in talks with LG Energy Solution and Stellantis NV for financial assistance in anticipation of the construction of a plant, also in Ontario.
According to calculations by the Ministry of Industry, Canada and Ontario have attracted more than $17 billion in investment from automakers and suppliers of electric vehicle batteries and battery components since 2020.
Last month, the leader of the Conservative Party, Pierre Poilievre, denounced the lack of details about the financial effort that the Trudeau government had made to convince Volkswagen to set up its factory in Canada.