Unprecedented contract provides annual production subsidies as well as a grant toward the factory’s capital cost
Champagne and other government officials believe the financial aid for Volkswagen is necessary to protect Canada’s position in the North American auto sector as it moves away from internal-combustion engines, and to ensure the country isn’t seen as merely a provider of critical minerals but also a source of advanced manufacturing and clean technology.
The economic value of bringing one of the world’s largest automakers to Canada for the first time — with the supply chain spinoffs it will create — is worth far more than the cost of the subsidies to the government, Champagne argued. The Inflation Reduction Act, despite its name, is in fact a law that enacts large-scale subsidies for low-carbon industries, particularly through production tax credits. Those incentives are generous and broadly available, meaning they could go beyond the official US$370 billion in estimated costs, depending on how widely they’re used.
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