'He is so wrong on this': Parts association president slams PBO report on cost of government battery plant investments
A new report from Canada’s parliamentary budget officer indicates the cost of government support for electric vehicle battery plants is higher than reported, by billions, and an industry spokesperson isn’t happy about it.
The PBO published an updated report Friday, suggesting the combined cost of government production subsidies for the Stellantis-LG battery plant in Windsor, the Volkswagen battery plant in St. Thomas, and the Northvolt plant in Quebec is $43.6 billion over 10 years, “Which is $5.8 billion higher than the $37.7 billion in announced costs,” said Yves Giroux, Canada’s parliamentary budget officer.
In his report, Giroux said the added $5.8 billion in non-announced costs represents foregone corporate income tax revenues for the federal, Ontario, and Quebec governments combined.
Giroux also estimated the amount of time it will take for the governments to “break-even” on the multi-billion dollar investments.
“We estimate a break-even timeline of 15 years for the $13.2 billion production subsidy announced for Volkswagen, and 23 years for the $15 billion in production subsidies announced for Stellantis-LGES,” added Mr. Giroux.
Giroux said when the announcements were made, the government indicated the break-even period for the Volkswagen subsidies would be five years.
“We found that was very suspicious for such a short period. To recover what was at the time, almost $15 billion. So we decided to look into it,” he told CTV News.
Giroux said his methodology for determining a return-on-investment includes calculating direct economic benefits, indirect impact like the supply chain, and the induced economic activity it creates.
“That's a totally legitimate reason to spend billions of dollars, they just have to be transparent and honest about it. Rather than say, we will get our money back in less than five years, which is absolutely not possible,” Giroux said.
But Auto Parts Manufacturer’s Association president Flavio Volpe isn’t buying it, calling the report “inaccurate.”
“He is so wrong on this, that it questions his judgment overall,” said Volpe, who represents the interests of 100,000 workers in the auto parts manufacturing sector.
“If you're going to put your name on a report that's publicly funded, and you're not going to do a good job at it, either by omission or commission, I'm going to call you out,” Volpe said.
Volpe believes Giroux is not properly calculating the all-in benefits of selling a car — all the parts contained within — including batteries.
Volpe argues the battery plants will be the anchor in an EV ecosystem where supply chain spin-offs will speed up that break-even period, noting those weren’t taken into account by the PBO.
“Your methodology sucks,” Volpe said. “By definition, you have no idea what you're doing, or what you're talking about.”
Volpe told CTV News when reports like this come out, there are negative repercussions on public sentiment for what many in the industry herald as a good investment.
“What we're doing is we're creating a public debate based on the wrong set of facts that could lead people to conclusions, like this isn't worth it,” said Volpe.
Giroux agrees there are many factors the government considers aside from return on investment, in this case, keeping Canada’s automotive industry afloat was a primary consideration.
But he counters having the battery plants in Canada does not guarantee supply chain spin-offs in Canada, noting his methodology is robust and he’s just stating the facts.
“It's important for taxpayers to have a sense as to whether this is worth the investment from a money perspective, and also for government, to for them to be reminded that they have to be transparent and honest when they report on numbers,” Giroux said.
Volpe calls the report inaccurate and disingenuous.
“I call this, at the very least, a lazy report, because I don't want to say what I really think, which is, you did it on purpose,” Volpe said.
Volpe was very firm in his rebuttal because he thinks the next time the PBO authors a report on the auto industry, he should consult with people in the industry to determine the methodology.
“Call me next time, and we'll give you the math for it. We'll show you,” he said. “Cars are not art. It's just math and science: who makes what, where, when and why. The end.”
CTVNews.ca Top Stories
Hackers release corporate data stolen from London Drugs
Retailer London Drugs says cybercriminals who stole files from its corporate head office last month have released some of the data after it refused to pay a ransom.
Toronto man falls off his chair after seeing $70M Lotto Max win in his bank account
A Toronto man who won $70 million in a recent Lotto Max draw literally fell off his chair when he saw the funds in his bank account.
Montreal-area high school students protest 'sexist' dress code
Approximately 50 Montreal-area students — the vast majority of them female — were suspended Wednesday after their school deemed the shorts they were wearing were too short. On Thursday, several students staged a walk-out to protest what they believe is a "sexist" dress code that unfairly targets girls.
'Looking over our shoulders': A killing looms large in a little B.C. town
Something shifted in the pretty little village of Lumby, B.C., after Tatjana Stefanski vanished. It used to be the sort of place where parents let their kids roam free or play in the local creek, but everything has changed.
Remaining wrongful death lawsuit filed after deadly Astroworld concert has been settled, lawyer says
The one remaining wrongful death lawsuit filed after 10 people were killed during a deadly crowd crush at the 2021 Astroworld music festival has been settled, an attorney said Thursday.
'I won't stop,' Celine Dion says in trailer for upcoming doc about her health woes
Celine Dion's fans are getting a first glimpse of the superstar's struggle with a rare neurological disorder in an emotional trailer for an upcoming documentary about her career and life.
Hidden risks: Why ultra-processed food may be hurting our brains
Ultra-processed foods are quick, convenient and hard to avoid, but there is growing evidence that eating these products can have an impact on brain health, leading to cognitive decline and stroke.
What is 'slapped cheek disease' and should parents be concerned?
Despite its rough name, experts say most cases of 'slapped cheek disease' are mild and not a cause for concern.
Tim Meadows pledges not to shave until the Oilers win the cup, who are the team's other famous fans?
An unlikely celebrity emerged from social media to cheer on the Edmonton Oilers as they face the Dallas Stars tonight in Game 1 of the Western Conference Finals.