OTTAWA — Prime Minister Justin Trudeau is accusing his main rival, Pierre Poilievre, of wanting to scrap tens of billions worth of subsidies in the electric vehicle industry if he forms government, but auto executives say the reality is a bit more complicated.
Whether or not a future Conservative government decides to dump the deals that are so dear to Ontario and Quebec would depend on a variety of factors, including the result of the election south of the border and the nitty gritty details of the existing business deals.
“Well, it’s in the purview of the Crown in any of these agreements to be able to cancel without notice and so short answer is (Poilievre) could cancel,” said Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, in an interview.
Volpe added that it is “tough work” being in the opposition benches while these deals happen because they do not have a line of sight to the terms that were agreed on.
“If they form government, they’ll do a deep dive into the terms of those agreements, and I think they’ll see what we see, which is the Crown is protected,” he said.
Volpe said that production subsidies on batteries, which form the bulk of the multi-billion dollar deals given to Volkswagen and Stellantis, only get paid if the batteries are produced and it generates new tax revenue.
The subsidies are a match to subsidies offered under the Inflation Reduction Act in the United States and should they be removed south of the border, Canada would not have to pay them.
Daniel Breton, president and CEO of Electric Mobility Canada, said there is no sense in speculating on what a future Conservative government might do before we know if Democrats or Republicans will be in control of the White House this November.
If Kamala Harris is elected U.S. president, chances are she will continue supporting the EV policies that the current administration put in place.
Donald Trump, on the other hand, has threatened to end the production of electric vehicles, while his vice-presidential nominee J.D. Vance has introduced a bill to not only repeal tax credits for EVs, but replace them with subsidies for U.S.-made gas-powered vehicles.
“If Trump and the Conservatives come into power, there are some chances that Conservatives follow the policies south of the border,” said Breton.
Brian Kingston, president and CEO of the Canadian Vehicle Manufacturers’ Association, said there is always a “risk” when Canada’s biggest trading partner announces a major policy change but said that the industry is moving towards electrification regardless.
“So, regardless of what a potential Republican presidency versus a Democrat would do, if you just look at the investment dollars that have gone into this technology, it is clear that the industry sees that this is the future,” he said.
Poilievre has been critical of the large subsidies given to corporations to promote the EV industry in Canada. He notably criticized the Volkswagen facility in St. Thomas, Ont., last year, arguing on X that “this money belongs to Canadians … not to a foreign corporation.”
He has also attacked the government for the foreign replacement workers brought on for some of these new plants, although Liberals have argued there was only a small number of them.
Poilievre has not explicitly said what he would do with those deals if he forms government and his office did not clarify his stance, instead offering a statement blasting the federal Liberals for failing to protect autoworkers and driving out investment out of the country.
“We will bring home powerful paycheques and make sure that any use of Canadian tax dollars will only go to support Canadian workers,” said Conservative labour critic Kyle Seeback in the statement.
Auto executives noted with great interest Poilievre’s promise to slap massive import tariffs on Chinese-made EVs, similar to U.S. President Joe Biden’s plan. Canada is expected to follow suit on the tariffs after holding consultations this summer.
Trudeau dismissed Poilievre’s comments in a press conference this week as a “joke” and accused him once more of wanting to cut his government’s investments in EVs.
“We have been there every step of the way, and the federal Conservatives continue to say they’d cut it all. They don’t support it. They don’t believe in investing in Canadian workers. So for him to suddenly turn around and say, ‘Oh we’re worried about EVs’? That’s baloney.”
Kingston said he is “encouraged” by what he has been hearing so far from Poilievre in terms of EV production, like his intention to speed up the approval process for mines.
“Canada has every mineral required for advanced EV batteries, and we have these anchor facilities being built as we speak that are going to be producing enough battery capacity, for example, in Windsor, to put batteries into 500,000 vehicles every single year,” he said.
“We have an economic opportunity that is generational, if we can get our mining sector up to speed, projects on the line and build out this EV supply chain,” he added.
Volpe said that Doug Ford’s government in Ontario “wasn’t initially pro-automotive” when it came to power in 2018, pointing to the closing of General Motors shutting down its Oshawa plant. At the time, Ford said there was nothing the province could do.
“They’ve come around to automotive on their own through hard work and due diligence, and have been the provincial partner in the greatest investment run in the history of the industry in this country,” said Volpe.
“I expect them to defend their decisions and their track record if they ended up with a federal partner that decided that they wanted to change their minds.”
National Post
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