It will take the Canadian and Ontario governments 20 years — not five as Prime Minister Justin Trudeau claimed — to break even on tens of billions of dollars in tax credits committed to Volkswagen and Stellantis battery plants in Ontario, according to an analysis from Ottawa’s budgetary watchdog.
Production subsidies for the battery plants are expected to begin flowing next year and are projected to amount to $28.2 billion by 2032.
But the two levels of government funding the tax breaks should not expect a positive return on their investments until 2043, when the tax revenue generated from the sites will exceed the initial subsidies, according to a Sept. 12 report from Parliamentary Budget Officer Yves Giroux.
Auto experts, however, warn the PBO analysis is “cursory,” taking only a small amount of the economic activity generated by the plants into account, while the initial federal outlook was based on the big picture.