Canada’s auto industry has lost out on at least two large deals to the tax incentives provided under the U.S. Inflation Reduction Act (IRA) for battery-cell and component makers. The federal government has vowed a response in its March 28 budget, but any critical misstep could automatically send more investments to the United States.
The right response is a hot debate within the industry, although the reality is that Canada lacks the sheer economic punch to go toe-to-toe with the IRA’s provisions. Perhaps it doesn’t have to, but a response from Ottawa can’t come soon enough.
Ford Motor Co. on Feb. 13 said it had picked a site in Michigan for a battery-cell plant, instead of locations in Canada or Mexico, because of the incentives offered by the IRA. A week later, Tesla cited the legislation, passed in August, for plans to scale back its battery ambitions in Germany in favour of alternatives in the United States.
VOLKSWAGEN PICKS CANADA, ANYWAY