Canada's Department of Industry confirmed it approved secret subsidies to Volkswagen (VW) to construct an EV battery plant in St. Thomas, Ontario. Conservative MP Brad Vis questioned department managers, who promised to release the figure to the Commons industry committee.
"The number of $15 billion was being thrown around," Vis told the committee, as reported by Blacklock's Reporter. "I know the government of Germany offered Volkswagen over $10 billion to have a lithium battery processing plant in that country."
"We're talking a lot of money here."
On March 13, Volkswagen announced it would build a battery factory in St. Thomas, creating nearly 5,000 jobs — employing 2,000 to 3,000 when it opens in 2027. PowerCo SE, the battery division of VW, is expected to begin electric vehicle battery production at its newest 1,500-acre "gigafactory" when it opens.
"There will be two to three million people coming to Ontario during the next 10 years, and we will get our fair share of them," said St. Thomas Mayor Joe Preston.
Last August, VW and Mercedes Benz signed a memorandum of agreement, a "battery material co-operation agreement" with Canada for access to lithium, nickel and cobalt, minerals critical for battery production. The federal government also offered incentives for battery investment.
"We heard with great fanfare over the last number of days that the Government of Canada invested with Volkswagen to develop a new battery plant," said Vis. "Can you tell us how much money the government gave Volkswagen?"
"How much?" he asked. "That information is not yet public," replied Sheryl Groeneweg, director general of industrial strategy at the industry department.
"There is nothing I can communicate to you at this point," said Groeneweg.
Vis asked: "Are you aware of the number but unable to give it to me?" Groeneweg replied “Yes.”
Vis immediately asked that cabinet disclose the information to the industry committee. "I'm not asking for something theoretical," he said, as reported by Blacklock's Reporter.
"The witness told this committee that she has the information that we are seeking, so it's a very specific request," said Vis. "I'm just looking for…how much money the Government of Canada [gave] Volkswagen to build the battery plant?"
The committee asked for the figure in writing. "I understand the department will provide a written response to the committee with the information," said Liberal MP Joël Lightbound, chair of the committee.
On March 28, cabinet repeatedly cited the VW announcement as proof "we are building big things here in Canada," as Finance Minister Chrystia Freeland said in her budget address.
On March 22, Prime Minister Justin Trudeau told reporters that all Canadians are "celebrating the fact that Volkswagen chose St. Thomas."
"What it says to me, to the whole world, is that Canada can win, and as Canadians, we can win big at a time where there is a lot of competition for these investments," said Industry Minister François-Philippe Champagne on March 21.
"When will we find out how much we had to give?" asked a reporter. "We are going to do that in due course," replied Champagne, calling the VW plant "an investment that will pay dividends for generations to come."
In December, Ottawa pledged to make all new vehicles sold in Canada electric vehicles by 2035. Federal Environment Minister Steven Guilbeault said that meeting that target begins with making 20% of all passenger vehicles sold in Canada electric by 2026.
Passenger vehicles account for half of all road transportation emissions and about 10% of Canada's total emissions across all sectors.
The Government of Canada is pushing for six million more zero-emission passenger vehicles by 2030. Before the COVID pandemic, annual sales in Canada of cars and light trucks were under two million units, with the total stock of such vehicles in Canada being about 23 million.
However, a recent study uncovered that they could lose up to 30% of their range in freezing temperatures, possibly jeopardizing that target.
According to Seattle-based Recurrent, which measured range loss in 7,000 EVs at temperatures between -7°C and -1°C, the Volkswagen ID.4 lost 30% at those temperatures. EVs use more energy to heat up than gas-based vehicles due to less wasted energy. Hence, less juice from the EV battery goes to the range.
"Bringing Volkswagen to Canada is a home run for the country," Champagne told the House of Commons on March 27, as reported by Blacklock's Reporter. "It is the first manufacturer we have brought to our country in 35 years, and it is the first time we have brought a European manufacturer to Canada."
The Volkswagen plant is Canada's second European auto factory, with Volvo operating an assembly plant in Halifax from 1963 to 1998.