Go once go Twice? The new Volkswagen factory will go to Canada for 9 billion euros

It was valuable for Canada to host Volkswagen’s first North American battery plant. Justin Trudeau’s government has promised Volkswagen a subsidy of 5.5 to 9 billion euros. In addition, Canada is paying more than 470 million euros as a subsidy for the construction of the factory. The province of Ontario is adding another 340 million euros. And that while Volkswagen estimates the construction costs of the factory around 4.8 billion euros.

European and American automakers are under intense pressure to increase production of electric vehicles. They want to reproduce in the West, as they did with combustion engines, says ING economist Rico Luman. They also want to be less dependent on China.

It would still be interesting if Volkswagen chose Canada

The Volkswagen factory will be in St. Thomas in Ontario, near the American city of Detroit. “With this historic project (…) we are laying the foundation for Canada’s battery industry,” Prime Minister Trudeau said. According to Frank Blome, head of Volkswagen’s battery company, the plant could be the largest of its kind in the world.

It would still be interesting if Volkswagen chose Canada. The US state of Oklahoma was also in the race. Oklahoma thought it had made a strong bid, aided in part by Anti-Inflation Act of US President Joe Biden. Under this law, developers of sustainable technologies can receive all kinds of financial benefits. To please Volkswagen, Canada offered the same, a French newspaper reports The world.

Money well spent, believes Trudeau, who expects the battery factory to generate EUR 136 billion for his country over the next ten years. According to Canadian broadcaster CBC, the certainty is built in. This is how the benefits end when Americans take them Anti-Inflation Act withdraw and Canada does not have to pay more subsidies than the United States would. If subsidies in the United States decrease, Canada may also reduce spending.

American VW customers will continue to benefit

With Canada’s option, Volkswagen continues to claim tax benefits from the United States. To stimulate sales of electric vehicles, drivers can receive a tax benefit of around 6,900 euros on the purchase price. The car battery must be made on the North American continent. The factory will have the capacity to produce one million car batteries every year.

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