While Prime Minister Justin Trudeau and British Columbia Premier David Eby were all smiles Tuesday after announcing significant funding for a lithium-ion battery cell production plant, the Canadian Taxpayers Federation (CTF) is slamming the latest instance of what they call “corporate welfare.”
Trudeau alongside Eby announced federal and provincial government funding totalling $284.5 million for a new E-One Moli battery plant in Maple Ridge, B.C.
The federal government commits $204.5 million, and the B.C. government will contribute up to $80 million. E-One Moli and private sources are to provide the remaining funds.
The facility “will create up to 350 new jobs and secure over 100 existing positions,” according to a news release from the Prime Minister’s office.
The plant will produce high-performance lithium-cell batteries, essential for various products, including electric vehicles (EVs). The facility is expected to produce up to 135 million battery cells per year.
“When we support projects like E-One Moli’s new facility in Maple Ridge, we bolster Canada’s role as a global clean tech leader, we create good jobs, and we help keep our air clean,” said Trudeau in the release.
However, the CTF was not as optimistic as the prime minister.
As the CTF points out, taxpayers will be on the hook for more than $632,000 per job.
British Columbia Director of the CTF, Carson Binda, voiced concerns over taxpayer money being used to subsidize multinational corporations rather than addressing the immediate needs of ordinary Canadians.
“Taxpayers are struggling, and our governments shouldn’t be choosing to help corporations instead of ordinary Canadians,” he said.
Franco Terrazzano, Federal Director of CTF, pointed out such corporate subsidies’ inefficiency.
“Instead of raising taxes on ordinary Canadians and handing out corporate welfare, governments should be cutting red tape and taxes to grow the economy,” he said.
The decision to fund the battery plant in Maple comes amidst growing concerns over the unsold inventory of EVs across North America, challenging the feasibility and market readiness of such a substantial investment in EV-related infrastructure.
The North American market, particularly in the U.S., has seen a substantial build-up of unsold EV inventory. The first half of the year saw a staggering 350% increase in unsold EVs, amounting to over 92,000 units by June, according to The Globe and Mail.
This surplus inventory raises crucial concerns about the viability of the EV market. The average price of these vehicles, hovering around US$64,000, is a major deterrent for potential buyers, significantly higher than the average cost of gas-powered vehicles. This price disparity is further exacerbated by the additional costs associated with EVs, such as charging equipment for plug-in models.
Consumer hesitation is also fueled by practical challenges associated with EV ownership. Stories of drivers stranded due to depleted batteries during heatwaves have become increasingly common. Also, EVs perform worse in Winter, losing up to 30% of their range, according to CBC.
A report published by the PBO shows that government handouts to other battery manufacturers won’t break even for decades.
“The break-even timeline for the $28.2 billion in production subsidies announced for Stellantis-LGES and Volkswagen is estimated to be 20 years, significantly longer than the government’s estimate of a payback within five years,” the PBO said.