Friday, April 21, 2023

ALL CAPITALI$M IS STATE CAPITALI$M
Ontario and Ottawa spending billions to bring Volkswagen battery plant to Canada

Story by Ryan Tumilty • 

A Volkswagen logo during the New York International Auto Show, in Manhattan, New York City.© Provided by National Post

Ontario and the federal government are putting $1.2 billion into a new Volkswagen facility in St. Thomas, Ont, while the federal Liberals are also promising the German automaker up to $13 billion in subsidies to build batteries for electric vehicles.

News that Volkswagen had picked St. Thomas, Ont. for its next facility was announced in March, but at an event Friday in the southwestern Ontario community, Premier Doug Ford and Prime Minister Justin Trudeau will announce they’re bringing the plant to Canada with massive subsidies.

Ontario will contribute $500 million for the plant’s construction and the federal government will add another $700 million. The massive facility will be run by PowerCo. The company’s battery subsidiary is expected to employ 3,000 people directly and thousands more in spin-off industries.

Bloomberg was first to report that the federal government is also giving the company ongoing operating subsidies that could add up to more than $13 billion if the firm meets targets for producing batteries. Volkswagen is the world’s largest automaker and recorded a profit in 2022 of over $33 billion.

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Ontario economic development minister Vic Fedeli, said the money the two governments are putting on the table is well worth it and will be paid back within five years. He said the plant will lead to spin-off companies to provide materials that are massive in their own right.

“There are companies that are needed. These will be billion-dollar companies needed to make cathode, anode separator, copper foil and lithium hydroxide,” he said.

He said the entire industry will benefit from the new plant, which will be the largest manufacturing facility in the country.

“It’s not about one or two companies. It’s about the 100,000 men and women whose jobs were at risk. And it’s about the 700 parts makers, 500 tool and die and mold maker companies, 300 connected and autonomous vehicle companies.”

Fedeli said in addition to the financial investment, Ontario offers close access to critical minerals, an educated workforce and carbon-free electricity.

“We can certify that it’s clean energy, zero-emission energy going into their plants, so they’re 100% emissions free. That’s a really important piece,” he said.

The two governments provided taxpayer money to another battery plant last year. The Stelantis – LG battery plant in Windsor is a $5 billion facility. Citing ongoing negotiations with firms like Volkswagen, they have not released the money involved in that deal, but Ferdeli said it was similar to the Volkswagen deal.

Federal Industry Minister François-Philippe Champagne defended the $13-billion federal subsidy and said it would pay off.

“Talk to any banker. He would say if you get your money in five years for a plant that’s going to be there for 100 years, that’s a pretty good deal for Canadians,” he said.

The Volkswagen plant is the company’s first outside of Europe and one of only a handful of the company’s proposed battery plants.

The ongoing subsidies are designed as a match to U.S. President Joe Biden’s administration’s inflation reduction act, which is offering massive subsidies for green manufacturing. The $13 billion will be paid overtime if the company hits certain milestones, and if a future U.S. administration removes the subsidies, Canada will stop paying them to Volkswagen.

Champagne said Canada’s bid was about much more than money.

“We won because of the talent of our people. We won because we have the critical minerals. We won because we have renewable energy.”

Twitter: RyanTumilty

Email: rtumilty@postmedia.com

Canada offering more than C$13 billion for VW battery plant - govt source

Story by Reuters • Yesterday 

OTTAWA (Reuters) -Canada has agreed to provide up to C$13 billion ($9.7 billion) in subsidies and a C$700 million grant to lure Volkswagen AG into building its North American battery plant in the country, a government source said on Thursday.


Trucks at the IAA Transportation fair in Hanover

The total Canadian investment, which could also include funds from the Ontario government, will largely match what Volkswagen would have got from the United States through the Inflation Reduction Act (IRA), the source said.

The carmaker declined to comment on the subsidies, which the source said would be disbursed over a decade. The plant will cost about C$7 billion to build, the source told Reuters, confirming an earlier report by Bloomberg News.

The deal showcases how the U.S. green package, which offers $369 billion of subsidies for electric vehicles and other clean technologies, is putting pressure on other governments to ramp up financial incentives to lure investments.

The new Volkswagen battery plant in Canada will have a maximum capacity of 90 gigawatt hours, enough to provide batteries for more than a million cars annually, Handelsblatt reported, citing a company source familiar with the matter.

Volkswagen declined to comment on the Handeslblatt report. It is expected to announce further details of the project on Friday in a meeting between the management of its battery unit PowerCo and Canadian Prime Minister Justin Trudeau in Ontario, where the plant will be located.

Europe's biggest carmaker wants PowerCo to become a global battery supplier, and to meet half its own demand with plants mostly in Europe and North America, the carmaker's board member in charge of technology told Reuters in an interview in March.

PowerCo, set up last year, is targeting more than 20 billion euros ($21.94 billion) in annual sales by 2030. Production in Ontario is scheduled to start in 2027.

(Reporting by Steve Scherer, Riham Alkousaa and Victoria Waldersee; Editing by Franklin Paul and Jan Harvey)

Federal government giving Volkswagen up to $13B in subsidies to secure St. Thomas EV battery plant

Story by CBC/Radio-Canada • Yesterday 

The federal government has agreed to give Volkswagen up to $13 billion in subsidies over the next decade as part of a deal to ensure the automaker builds its electric-vehicle battery plant in southern Ontario.


Volkswagen plans to build its first overseas battery manufacturing plant in southwestern Ontario.© Chris Helgren/Reuters

The contract follows promises by Ottawa to remain competitive with the U.S. and convince electric vehicle battery producers to set up their plants in Canada. But the price tag is raising eyebrows.

"This is game-changer for our nation," said Innovation Minister François-Philippe Champagne while fielding questions from reporters Thursday.

The federal government will provide annual production subsidies to the German automaker and kick in funds for the massive factory in St. Thomas, which is estimated to be the size of 391 football fields, making it the largest factory in Canada.

Bloomberg News first reported the subsidy amount. Sources with knowledge of the deal have confirmed the details of the contract with CBC News.

According to details of the deal, federal production support for the plant is expected to range from $8 billion to $13 billion over 10 years.

Ottawa is also offering about $700 million in capital expense grants to Volkswagen through its Strategic Innovation Fund.

Champagne said those subsidies will come into effect after the company builds the $7 billion plant and begins production.

Sources say that, according to the terms of the contract between Ottawa and Volkswagen, Canada's production subsidies will stay in place only as long as the U.S. Inflation Reduction Act remains in force. That U.S. law offers billions of dollars in clean energy and net-zero subsidies south of the border.

If the U.S. reduces its incentives, Canada's subsidies will also go down.

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The government has been open about its desire to be a player in electric vehicles, widely seen as the future of the auto industry.

Champagne defended the cost, arguing the job creation and supply chain spinoffs from bringing one of the world's largest automakers to Canada will be worth more than the cost of the subsidies to the government.

"When you see a transformation in history like that, you have to seize the moment. You lose that, what's going to happen to the auto sector? What's the cost of inaction?" he said.

Speaking to reporters Thursday, Champagne argued Canada will see the economic impact of the plant in its first five years.

"Talk to any banker. He would say if you get your money in five years for a plant that's going to be there for 100 years, that's a pretty good deal for Canadians," he said.

Volkswagen announced last month that it had chosen St. Thomas, Ont., about two hours northwest of Detroit, as the site for its first North American "gigafactory."

At the time, it was not known how much the federal and provincial governments had put on the table to secure the plant.

The Ontario government is also expected to subsidize the project but those details are not yet public.

The Official Opposition is expected to attack the Liberals over the deal.

When news of the factory was announced last month, Conservative Leader Pierre Poilievre tweeted "this money belongs to Canadians. Not to a foreign corporation. Not to Justin Trudeau. How much of Canadians' money is he giving to this foreign corporation?"

Automotive Parts Manufacturers' Association president Flavio Volpe said he knows not everyone will be comfortable with the price tag.

"We think it's incredibly worth it, but it is a very material number," he said.

"These are good jobs that pay for mortgages and feed kids and build communities. They're not, you know, short-term jobs that people slip in and out of. You can build a career on them."

More details of the deal are expected to be made public Friday.

The plant will be run by a Volkswagen subsidy called PowerCo.

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