The Canadian federal government announced Friday it will supply Volkswagen with massive production subsidies for the automaker's new electric vehicle battery plant in Canada, Trend reports citing Xinhua.
Canada has committed to providing Volkswagen with production support to match the United States Inflation Reduction Act (IRA) Advanced Manufacturing Production Credit, equalling 35 U.S. dollars per kWh, according to a news release from the prime minister's office.
The federal investment ranges between 8 billion and 13.2 billion Canadian dollars (5.8 billion and 9.6 billion U.S. dollars), depending on production levels, the release said, adding that the full economic impact of the project will be equal to the value of government investment in less than five years.
The release said, just like in the United States, Canada's support will only be for what is produced and sold and will phase out by 25 percentage points every year beginning in 2030. The agreement also has the flexibility to be adjusted should the U.S. Advanced Manufacturing Production Credit change in the United States.
To support Volkswagen's investment, the government of Ontario is providing 500 million Canadian dollars (365 million U.S. dollars) in direct incentives to the company, and investing hundreds of millions of dollars in infrastructure improvements to roads, railways, water, electricity, and police and fire safety.