The Trudeau government and the Ford government recently announced a multi-billion dollar taxpayer-funded subsidy for Honda to expand its Alliston, Ontario plant for electric vehicle (EV) production. This subsidy, along with previous deals with other automakers, could total $50.7 billion, according to the Parliamentary Budget Officer.
The Honda deal aims to manufacture 240,000 vehicles a year and preserve 4,200 jobs while adding another 1,000 jobs. However, with only 185,000 EVs sold in Canada in 2023, questions arise about the demand for EVs to support these investments.
The long-term success of Canada’s EV sector also hinges on access to the U.S. market. Political developments in the U.S., including potential tariffs and trade restrictions under both Trump and Biden administrations, pose risks to Canadian EV producers.
The Canada-U.S.-Mexico Free Trade Agreement could be at risk of termination or renegotiation, potentially impacting Canadian EV exports. Biden’s support for domestic EV production could lead to trade restrictions if Canadian exports threaten U.S. production.
Canadian politicians, particularly Trudeau and Ford, have placed the future of the heavily subsidized EV sector on uncertain U.S. political policies. This gamble could prove costly for Canadian taxpayers in the long run.
The success of Canada’s EV industry will depend on market demand, access to the U.S. market, and navigating potential trade barriers under different U.S. administrations. The future of the EV sector remains uncertain amidst changing political landscapes.