Electric vehicle subsidies will cost up to $50 billion, budget office report finds

Electric vehicle subsidies will cost taxpayers up to $50 billion, according to a Budget Office report, a figure three times the value of the annual production of the entire Canadian auto industry.

According to Blacklock's Reporter, the document titled "Costing Support for EV Battery Manufacturing" said that public debt charges for federal and provincial governments is predicted to increase the total cost of support for EV battery manufacturing. 

While Cabinet estimated the costs of subsidies for four EV manufacturing plants at $37.3 billion, analysts said the real numbers are much higher. According to the report, actual figures are closer to $43.6 billion plus an additional $6.6 billion in debt charges, for a total of $50.2 billion. The four plants are a Volkswagen battery in factory St. Thomas, Ontario, two Stellantis battery factories in Windsor and Brampton, and a Northwold factory in Sainte-Basile-le-Grande, Quebec.

On Monday, the Globe and Mail reported that plans for the Windsor plant, which is set to receive up to $15 billion in subsidies, have sparked concerns that factory jobs could end up going to foreign workers instead of Canadians. 

The $50 billion figure does not include a subsidy of $322 million to build a Ford battery parts factory in Bélancour, Quebec, or a November 14 announcement of $204.5 million in subsidies for a Maple Ridge, B.C. E-One Moli plant for lithium batteries.

According to a Department of Industry briefing note from 2022, "Automotive Industry Zero Emission Vehicles," the entire Canadian auto sector contributed $16 billion to national gross domestic product. 

The report from the Budget Office also said that even optimistic forecasts show it will take up to 23 years for taxpayers to recoup costs.  “Our estimates of the break-even timelines for the production subsidies are based on several optimistic assumptions,” wrote analysts. “It is certainly possible that break-even timelines for the production subsidies exceed our estimates.”

Budget Officer Yves Giroux said in testimony to the Commons industry committee on October 5 that he did not have a vested interest in defending the numbers provided by the Cabinet. 

“As soon as we publish a report that sets the record straight there are accusations we have not understood the problem or have a bone to pick,” he said. “That’s not the case.”

Giroux called Cabinet's forecasts "wildly optimistic" and said the Budget Office's approach is "reasonable, much more so than the government's."

“I work for parliamentarians,” Giroux stated. “I work for the benefit of taxpayers and Canadians. I don’t have a vested interest.”

Liberal MP Ryan Turnbull (Whitby, Ont.) said the Budget Office's analysis was "pessimistic."

"We have a vested interest in building an electric vehicle supply chain to help increase the economy and fight climate change," said Turnbull. “I find your assumptions very narrow because you are not looking at the broader vision.”