Automotive
Taxpayers call on Ford and Trudeau to rule out any additional EV handouts
From the Canadian Taxpayers Federation
Author: Jay Goldberg
“Only politicians and government bureaucrats could think it’s a good idea to blow millions of dollars of taxpayer cash per job to build cars that people don’t want”
The Canadian Taxpayers Federation is calling on the Ford and Trudeau governments to rule out any additional EV manufacturing handouts.
“Canadians are struggling to put gas in their tanks and food on their tables,” said CTF Ontario Director Jay Goldberg. “The last thing governments should be doing is looking at borrowing billions more on the backs of taxpayers to hand over to wealthy auto giants.”
Ontario Economic Development Minister Vic Fedeli says there are as many as three more EV corporate welfare negotiations ongoing, according to the National Post.
The Ford and Trudeau governments have thus far handed out $57 billion in electric vehicle manufacturing subsidies to wealthy auto giants like Volkswagen, Stellantis, Honda and the Ford Motor Company.
Each handout has worked out to cost taxpayers millions of dollars for every job directly created.
Recent news has shown that gambling on EVs is a risky bet for taxpayers.
The Ford Motor Company is losing $132,000 on every electric vehicle sold, according to recent reports. Tesla has missed sales targets, with sales down by more than 13 per cent in the first quarter of 2024. AutoTrader says Canadian interest in EVs is down by 10 per cent compared to last year.
“Only politicians and government bureaucrats could think it’s a good idea to blow millions of dollars of taxpayer cash per job to build cars that people don’t want,” said Goldberg. “Premier Doug Ford and Prime Minister Justin Trudeau need to put down the taxpayer credit card. There must be no more EV handouts, full stop.”
From the Fraser Institute
Asian countries such as China and Japan were not particular threats to prior automotive markets because North America’s massive and diverse internal combustion vehicle markets were capable of relatively lower-cost production of superior quality vehicles. That’s not shaping up to be the case for EVs, which are vastly more expensive coming off North American assembly lines than in China and other Asian countries.
Seemingly every week, Canada’s electric vehicle (EV) transition policy framework grows more incoherent. The goal of Canada’s EV policy is to ensure all new light-duty vehicle sales in Canada are zero-emission vehicles (ZEVs), with a strong emphasis on battery-electric vehicles, by 2035.
The latest incoherence is Prime Minister Trudeau’s announcement of 100 per cent tariffs on Chinese EV imports and 25 per cent tariffs on Chinese steel and aluminum imports (the Canada needs to build EVs). This will directly undercut the government’s EV transition targets by denying Canadians access to affordable electric cars.
The stated rationale for the tariffs is, according to Finance Minister Chrystia Freeland, that the “Chinese are trying to corner the North American EV market by dumping subsidized vehicles into it” and that “China has an intentional, state-directed policy of overcapacity and oversupply designed to cripple our own industry” so “we simply will not allow that to happen to our EV sector.” And arguably, some of that is probably reasonable.
Tariffs are generally understood as protectionist mechanisms, designed to shield domestic industries from lower-cost foreign competition by making imported goods more expensive. Additionally, they can serve as punitive measures to penalize countries for hostile economic or political actions. By limiting access to one’s markets, tariffs can reduce the profits of the targeted country, thereby pressuring it to alter behaviours or policies. When imposed against countries intentionally sabotaging markets, tariffs may be considered a legitimate response.
But tariffs on China will also hurt Canadians by keeping lower-cost goods out of our market, leaving them with only higher-priced goods and services provided by protected domestic industries that need not fear price competition and thus feel little pressure to lower the prices for their goods and services.
And this is part of the incoherence of the new Trudeau tariff policy. The Trudeau EV mandates are set to create, in essence, a monopoly on the types of automotive technologies (again, EVs) allowed to be used in Canada, which other countries can manufacture more cheaply than domestic manufacturers. Asian countries such as China and Japan were not particular threats to prior automotive markets because North America’s massive and diverse internal combustion vehicle markets were capable of relatively lower-cost production of superior quality vehicles. That’s not shaping up to be the case for EVs, which are vastly more expensive coming off North American assembly lines than in China and other Asian countries.
By driving up the costs of buying EVs in Canada, the Trudeau government will directly undercut its EVs-by-2035 mandate. If people can’t afford EVs, as most currently cannot, the EV mandate targets are doomed. People will simply hold their old internal-combustion vehicles for longer. This trend is already observable in the United States where new vehicles have become more expensive. Americans are holding on to their vehicles longer than ever, with the average vehicle age reaching 13.6 years.
The Trudeau government’s highest priority has been the war on climate change, which various government leaders in Canada and around the world have proclaimed the greatest threat to people and the planet in human history. But if the government is sincere about this, then the priority should be to maximize Canadians’ access to cheaper EVs, and the prime minister should be largely indifferent to where Canadians choose to source those EVs. Indeed, he should urgently want low-cost EVs available to Canadians for there to be any hope of achieving his all-EV by 2035 goal.
Author:
From Canadians For Affordable Energy
More good money is being thrown after bad, but that seems to be the theme of Trudeau’s government.
On Monday Goodyear Tire announced a $575 million expansion of their Eastern Ontario manufacturing plant to produce electric vehicles, and to make their plant more energy efficient.
And Doug Ford and Justin Trudeau were there for the photo opportunity. Why? Because — shocker — this move comes with serious money from taxpayers in Ontario and throughout Canada. Goodyear is set to receive up to $44.3 million from the federal government through the Strategic Innovation Fund and $20 million from Ontario through the provincial Invest Ontario.
In case you’ve lost track of the money — your money — which has been thrown down this blackhole to date, here’s only some of the close to $46 billion that has been committed:
- Northvolt, electric vehicle battery manufacturing facility, up to $1.34 billion
- Stellantis—LGES (NextStar), EV battery manufacturing facility — $5 billion
- Volkswagen (PowerCo), Federal ($700 million) and Ontario governments ($500 million)
- Ford EcoPro, $322 million
- Stellantis, Federal ($529 million) and Ontario government ($513 million)
- Umicore, Federal ($551.3 million) and Ontario government ($424.6 million)
- Ford Motor Company of Canada, $295 million from both the Federal and Ontario governments
- GM Ingersoll, $259 million from both the Federal and Ontario governments
More taxpayer dollars for cars that no one wants to buy, and are only affordable with heavy government subsidies.
In fact, last month Ford Canada announced that they would be abandoning their plans to retool their plant in Oakville, ON to focus on EV production. Instead, the plant will begin to produce their popular F-Series gasoline-powered heavy duty pickup truck. Ford plants in Ohio and Kentucky are at full capacity and can’t keep up with the demand for the F-Series, so they are shifting some of the load to Oakville. (Trudeau might learn a lesson here about supply and demand, which is what makes a healthy economy work.)
Plant workers were no doubt relieved to hear this, as Ford had already delayed the date when the plant would begin producing EVs from 2025 to 2027, due no doubt to their multi-billion dollar annual losses on EVs. (They lost $4.7 billion on EVs in 2023 and they’re projected to lose nearly $5.5 billion this year.) Many workers had already been laid off, and many more layoffs were expected. But now they’ll be hard at work producing a reliable Internal Combustion Engine (ICE) pickup.
This should come as no surprise. We need only look around the world for examples of dwindling EV sales. In Germany, EV sales fell by 37%. This slump is directly related to the premature ending of the purchase subsidies program. Budget issues forced Germany to end the program a year sooner than anticipated.
In fact, whenever a country reports an increase in EV sales, be sure to look at the subsidies being offered. “In France, a social leasing scheme which helps to provide cheap EVs to low-income households helped see BEV sales increase by 14.9 per cent in the first half of 2024”. And in Italy EV incentives helped push EV sales “up by 7 per cent across the first six months of the year.”
The lavish subsidy programs for EVs have created a false economy whereby they are only attractive and affordable with taxpayer handouts. Canada should expect the same slump in sales when our own subsidy programs come to an end.
In fact, the only nation which shows no sign of slowing down on electric vehicles is China, where they’re pumping them out at breakneck speed. This is, of course, so that they can take advantage of the EV mandates which Canada and other nations have enacted. China’s EV manufacturers are able to undercut Western producers since they control the lion’s share of Lithium battery production.
Their government also heavily subsidizes the industry. But chances are, once they control most of the EV market share, bankrupting smaller producers, they’ll jack up the price. And because of the mandates, drivers will either have to pay what they’re asking, or else invest in a horse and buggy.
This has led to calls for the Trudeau government to impose punitive tariffs on Chinese EVs, to prevent them from inundating the Canadian market to the detriment of Canada’s economy and Canadian workers. Trudeau and co have dragged their feet, likely because they don’t want to offend Chairman Xi.
We certainly should impose those tariffs. But what would be even better for regular, everyday Canadian taxpayers — not that that ever seems to be top-of-mind for Trudeau or Doug Ford — would be to scrap the EV mandates altogether. Forcing Canadians to buy EVs by 2035 is a terrible policy that will make us poorer as individuals and poorer as a nation. And it will ultimately fail.
Better to admit that now, while we still have some money we haven’t paid out by the truckload to green corporate grifters.
Dan McTeague is President of Canadians for Affordable Energy.
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