A quick follow-up to our article on Volkswagen's recently announced E.V. battery “gigafactory” slated to be built in St. Thomas, Ontario. Despite the extreme cost -- $13.8 billion in Canadian taxpayer dollars, almost three times the average annual cost of all government aid for all corporations across Canada -- this is being sold as a big win for the Trudeau government, because of the thousands of jobs it's supposed to bring in to that not-exactly-thriving area. But it has already started to cause headaches as well.
The Toronto Star reports that as news of Volkswagen's sweetheart deal made its way through the industry, other companies started to wonder why Justin hadn't worked so hard to woo them too. Stellanis -- which owns Chrysler, Dodge, Jeep, and Fiat -- has begun threatening to pull out of their recently announced E.V. plant in Windsor, Ontario, if they don't get their own Volkswagen-style subsidies, and quick. In that case, they'll just head south of the border, where Biden's recently signed (and atrociously misnamed) Inflation Reduction Act promises more subsidies than they'd ever thought possible back when their original Ontario deal was signed.
Now Ottawa and Ontario have begun publicly bickering over how best to handle this, with Ontario premier Doug Ford (ostensibly a conservative, remember) saying,
“We need the federal government to step up as they did for Volkswagen,” said Ford, noting Queen’s Park gave Stellantis and VW $500 million apiece in provincial aid. "[Ontario] signed a deal with Stellantis… quite some time ago on infrastructure and we gave them the exact same amount as we gave Volkswagen, and we need the federal government to come to the table and show their support like they have all along,” he said, stressing Trudeau’s government has been “great partners” on numerous auto deals.
Ford's groveling tone notwithstanding, the Trudeau government is annoyed at being called out in such a manner:
Deputy Prime Minister Chrystia Freeland told reporters Monday she is “absolutely confident” the federal government will reach a deal with Stellantis, but she wants the provincial government to do more. “I also want to point out that the resources of the federal government are not infinite. And we are counting on Ontario to do its fair share. And we’re counting on Stellantis to be reasonable,” she added.
Not made of money, eh?
It is perhaps worth pointing out to Ms. Freeland here that her We're Not Made of Money argument is less convincing when she and her colleagues have spent the past few weeks telling everyone who will listen about the the nearly $14 billion check they just wrote for VW.
In any event, the Star further reports that "provincial and federal officials have been locked in crisis talks for days aimed at clearing the impasse," and that it is looking like Ontario will end up kicking in a bit more money to keep Stellantis happy. Whether the feds will follows suit is uncertain, but it seems likely. In their editorial on the Volkswagen plant, the Toronto Sun said the following:
[T]his is the future of so-called clean energy technology across Canada — massive public subsidies paid for by federal and provincial taxpayers to compete with the U.S. for as long as Biden’s legislation remains in place in America.
Barely one month later and that's already being proved exactly right. What's more, those same taxpayers will ultimately be required to pay more money for the cars these factories produce. Which is a perfect illustration of the bizarre economics of Electric Vehicles -- the consumers are forced to pay for both the factories and what they produce. They lose out on both sides of the equation.