Analysis: Government Spending Billions on EV Projects in Hopes of Creating Thousands of Jobs

The recent announcement of the Honda electric vehicle (EV) project on April 25 is considered the largest automotive investment in Canadian history by Prime Minister Justin Trudeau. However, concerns have emerged regarding government subsidies for EV production, amounting to billions, the inclusion of foreign workers, and a declining demand for EVs.

Since 2020, the federal government, along with provinces, particularly Ontario and Quebec, have allocated tens of billions of dollars in subsidies for EV and EV battery manufacturing plants. The objective is to have all new light-duty vehicles, such as passenger cars, SUVs, and light trucks, sold in Canada be zero-emission by 2035.

Governments in Canada have collaborated with companies on four significant projects for EVs and EV parts, including substantial investments in battery technologies.

Government Aid

The initial project involved the federal and Ontario governments providing Stellantis up to $529 million and $513 million, respectively, in May 2022 to enhance EV production. This was followed by an announcement in March 2022 about a $5 billion investment by Stellantis and LG Energy Solution for an EV battery manufacturing facility in Windsor.

In comments made to the media about a year later, it was clarified that the federal and Ontario governments were offering $15 billion in tax incentives to the manufacturer.

The second project involved German automaker Volkswagen, announcing in March 2023 plans to establish an EV battery manufacturing plant in St. Thomas, Ontario—its first such plant overseas.

The following month, the Ontario government stated that between $8 billion and $13.2 billion in subsidies had been approved for the project, with additional incentives directly provided to Volkswagen.