The Office of the Parliamentary Budget Officer (PBO) estimates that the federal government will hand over $16.3 billion to Volkswagen for the new electric vehicle (EV) gigafactory – about $2.4 billion more than they initially committed.
Earlier this year, it was announced that St. Thomas would be home to the German automaker’s first overseas battery manufacturing plant.
Canada agreed to $13.2 billion in production support and $700 million from the Strategic Innovation Fund for construction, costing a total of $13.9 billion.
The report estimates Ottawa will be providing $12.8 billion in production support, and meeting its $0.7 billion commitment for the construction of the plant. However, the PBO foresees an additional $2.8 billion being spent in tax adjustment dollars.
Parliament Budget Officer Yves Giroux addressed the findings on Wednesday, stating, “the economic benefits of building the new facility are marginal. We estimate the plant will increase real GDP in Canada by 0.01 per cent above its baseline projection by 2027 and will add around 1,400 jobs by the same time.”
When the project was announced, Prime Minister Justin Trudeau said the facility would create about 3,000 direct jobs.
Giroux also estimated the Volkswagen gigafactory would create $700 million in tax revenues for Canada, offsetting the feds’ investment in construction.
“PBO continues to examine the government’s support and will undertake an economic and fiscal analysis of the production support over the coming months,” the PBO concluded its analysis.
