The parliamentary budget officer says it will take the federal government until 2043 to break even on its deals with Volkswagen as well as Stellantis and LG Energy Solution. An illuminated Volkswagen logo is seen on the back of one of the automaker's ID.4 electric vehicles at Fully Charged Live, an electric vehicle (EV), renewable and clean energy and urban mobility exhibition, in Vancouver, B.C., Friday, Sept. 8, 2023. THE CANADIAN PRESS/Darryl Dyck

It will take 20 years for feds to break even with Volkswagen, Stellantis deals: PBO

The parliamentary budget officer says it will take the federal and Ontario governments until 2043 to break even on their electric-vehicle battery deals with two automotive giants.

The governments announced subsidies for Volkswagen and Stellantis-LG Energy Solution this year to entice them to build electric vehicle battery plants in Canada.

A report released by the PBO on Tuesday says it will take 20 years for government revenues generated from the production of both plants to equal the production subsidies, which will total $28.2 billion by the end of 2032.

In March, Canada reached a deal that will see Volkswagen get up to $13.2 billion in production subsidies for batteries they produce at a plant planned for St. Thomas, Ont.

Stellantis later asked for a similar deal for a plant it’s constructing in Windsor, Ont., and ultimately secured a $15-billion agreement.

The production subsidies for both plants are supposed to mirror incentives offered by the U.S. through the Inflation Reduction Act, a law passed in the summer of 2022 that makes significant investments in the green economy.

The cost of the Canadian production subsidies are to be shared between the federal and Ontario governments, with Ottawa shouldering two-thirds of the cost.

The budget watchdog’s calculation does not include any potential revenue that may be generated across the supply chain.

That’s in contrast to the federal government’s five-year break-even calculation for the Volkswagen deal, which includes expected revenue from production increases across the supply chain.

The federal government has not provided a break-even estimate for the Stellantis deal.