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$28.2 billion in EV battery production subsidies: Governments to break even in 20 years, PBO estimates

Ottawa (Ontario), September 12, 2023

The Parliamentary Budget Officer (PBO) today released his analysis of the support for Stellantis-LG Energy Solutions and Volkswagen to estimate the period over which government revenues generated from their EV battery manufacturing plants will be equal to the total amount of production subsidies announced by the governments of Canada and Ontario.

In June, PBO released a report that examined Canada’s support for Volkswagen’s electric vehicle (EV) battery manufacturing plant. Since this publication, the federal government and the government of Ontario announced new production subsidies for the Stellantis-LG Electric Solutions (LGES) EV battery manufacturing plant. Based on the federal government’s estimates, this brings federal and provincial production subsidies for Stellantis-LGES and Volkswagen to $28.2 billion by the end of 2032.

The federal government also announced a cost-sharing agreement with the government of Ontario under which the federal government will cover two-thirds of the production subsidies for Stellantis-LGES and Volkswagen ($18.8 billion), while Ontario will now cover one-third ($9.4 billion).

“We estimate that federal and provincial government tax revenues generated from the Stellantis-LGES and Volkswagen EV battery manufacturing plants over the period 2024 to 2043 will be equal to the total amount of production subsidies,” says PBO Yves Giroux. “That is, the break-even timeline for the $28.2 billion in production subsidies announced for Stellantis-LGES and Volkswagen is estimated to be twenty years, significantly longer than the Government’s estimate of a payback within five years for Volkswagen,” says PBO Yves Giroux.

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{"id":"RP-2324-015-S","is_published":"2023-09-12T12:57:05.000000Z","release_date":"2023-09-12T13:00:00.000000Z","title_en":"Break-even Analysis of Production Subsidies for Stellantis-LGES and Volkswagen","title_fr":"Analyse du seuil de rentabilit\u00e9 des subventions \u00e0 la production accord\u00e9es \u00e0 Stellantis-LGES et Volkswagen","internal_id":"RP-2324-015-S","metadata":{"abstract_en":"This report provides a break-even analysis of the support for Stellantis-LG Energy Solutions and Volkswagen to estimate the period over which government revenues generated from their EV battery manufacturing plants will be equal to the total amount of production subsidies announced by the governments of Canada and Ontario.","abstract_fr":"Ce rapport pr\u00e9sente une analyse de rentabilit\u00e9 du soutien accord\u00e9 \u00e0 Stellantis-LG Energy Solutions et \u00e0 Volkswagen afin d\u2019estimer la p\u00e9riode au cours de laquelle les recettes publiques g\u00e9n\u00e9r\u00e9es par leurs usines de fabrication de batteries pour v\u00e9hicules \u00e9lectriques (VE) seront \u00e9gales au montant total des subventions \u00e0 la production annonc\u00e9es par les gouvernements du Canada et de l\u2019Ontario.","highlights":[{"content":{"en":"The federal government and the government of Ontario recently announced production subsidies of up to $15 billion for Stellantis-LG Energy Solutions (LGES). Based on the federal government\u2019s estimates, this brings announced production subsidies for Stellantis-LGES and Volkswagen to $28.2 billion by the end of 2032.","fr":"Le gouvernement f\u00e9d\u00e9ral et le gouvernement de l\u2019Ontario ont annonc\u00e9 r\u00e9cemment des subventions \u00e0 la production maximales de 15 milliards de dollars pour Stellantis-LG Energy Solutions (LGES). Selon les estimations du gouvernement f\u00e9d\u00e9ral, cette mesure porte les subventions \u00e0 la production annonc\u00e9es pour Stellantis-LGES et Volkswagen \u00e0 28,2 milliards de dollars d\u2019ici la fin de 2032."}},{"content":{"en":"PBO estimates that federal and provincial government revenues generated from the Stellantis-LGES and Volkswagen EV battery manufacturing plants over the period of 2024 to 2043 will be equal to the total amount of production subsidies ($28.2 billion)\u2014a break-even timeline of twenty years.","fr":"Le DPB estime que les recettes des gouvernements f\u00e9d\u00e9ral et provinciaux g\u00e9n\u00e9r\u00e9es par les usines de fabrication de batteries pour VE de Stellantis-LGES et de Volkswagen sur la p\u00e9riode de 2024 \u00e0 2043 seront \u00e9gales au montant total des subventions \u00e0 la production (28,2 milliards de dollars) \u2013 soit une p\u00e9riode d\u2019atteinte du seuil de rentabilit\u00e9 de vingt 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author={Giswold, Jill},\n title={Break-even Analysis of Production Subsidies for Stellantis-LGES and Volkswagen},\n institution={The Office of the Parliamentary Budget Officer},\n year=2023,\n \n address = \u0022Ottawa, ON\u0022\n}","fr":"@techreport{DPB-RP2324015S,\n author={Giswold, Jill},\n title={Analyse du seuil de rentabilit\\\u0027{e} des subventions \\`{a} la production accord\\\u0027{e}es \\`{a} Stellantis-LGES et Volkswagen},\n institution={Bureau du directeur parlementaire du budget},\n year=2023,\n \n address = \u0022Ottawa, ON\u0022\n}"}}