Canada's budget watchdog says that Volkswagen’s (VOW3) Ontario-based battery plant is likely to cost Canadian taxpayers $2.4 billion more than initially estimated.
Parliamentary Budget Officer Yves Giroux said that the production tax credits that federal officials in Ottawa have offered Volkswagen will cost taxpayers $2.4 billion more than previously announced.
The Government of Canada and German automotive giant Volkswagen announced in April that they would each spend more than $20 billion to build a battery plant in St. Thomas, Ontario.
The Volkswagen battery plant represents the biggest electric vehicle investment in Canada’s history.
Federal officials promised Volkswagen $13.2 billion in manufacturing tax credits through 2032 and a $700 million federal grant.
Now, the Parliamentary Budget Officer says the tax credits will cost taxpayers more. Giroux also said that any economic benefits achieved from the construction of the Volkswagen battery plant would be “marginal.”
The federal government is trying to attract companies involved in the electric vehicle supply chain to Canada and faces stiff competition from the neighboring U.S.
The revised forecast from the Parliamentary Budget Officer comes as Ottawa prepares to enhance its subsidies offered to Jeep maker Stellantis (STLA), which stopped construction on a $5 billion battery plant in Windsor, Ontario, saying Ottawa reneged on its financial commitments.
Volkswagen’s stock has declined 9% in the past 12 months to trade at 129.50 Euros per share (Cdn$187.59).
