Electric vehicle manufacturing has hit a road bump in the Great White North. On May 15, Stellantis, one of the world’s leading automakers, paused construction at an electric vehicle battery plant in Windsor, Ontario, Canada. A funding argument with the Trudeau government is to blame.
In partnership with LG Energy Solution, Stellantis planned to invest over $5 billion into a 45 GWh battery manufacturing facility. Stellantis’s announcement is a major blow to Windsor’s economy, as the plant was estimated to create 2,500 new jobs.
Ontario Premier Doug Ford has urged Prime Minister Trudeau to give Stellantis the same amount of financial aid that he gave to Volkswagen. In April, Volkswagen signed a deal to receive up to $13 billion in subsidies for an electric vehicle battery plant in St. Thomas, Ontario. Meanwhile, the Trudeau government has pledged less than $1 billion to Stellantis’s Windsor facility. Stellantis has argued that this comparative lack of government support is unfair.
For decades, Canada has been losing auto manufacturing jobs to the United States and Mexico due to its relatively high business costs. The large subsidies offered to Volkswagen prove that Canada’s lack of economic competitiveness is a continuing problem.
For Canada’s electric vehicle industry to be sustainable over the long run, there will need to be a shift away from government subsidies and toward other incentives, such as tax breaks and fewer regulations. Subsidies will still be needed for Canada to rapidly transition to electric vehicles. However, they must become more modest. Otherwise, the precedent set by the Volkswagen deal will cause electric vehicle manufacturers to make unreasonable demands on the Canadian taxpayer.
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