Ottawa, Ontario — The nation’s top independent budget authority tossed a bucket of cold water on Volkswagen’s prospective EV battery plant in St. Thomas, Ont., predicting in a report released Wednesday that the plant’s economic benefits would be “marginal” at best.
Parliamentary budget officer (PBO) Yves Giroux explained further that the plant could actually cost the federal government about $16.3 billion over the next ten years, far greater than the initial estimate of $7 billion.
“Based on our analysis, the federal government’s financial commitment to Volkswagen will total around $16.3 billion over the period of the agreement,” Giroux said in a press release accompanying the report.
“The economic benefits of building the new facility are marginal,” he said.
Analysis from the PBO predicts that jobs at the plant will likely peak at 3,100 at the start of 2026, before slipping down to 1,400 by 2027.
The estimated cost of $16.3 billion included $12.8 billion in production support, $700 million contribution through the Strategic Innovation Fund (SIF) and an estimated $2.8 billion in tax adjustments, Giroux’s office reported.
The St. Thomas project remains well-supported by several levels of government, given Ontario’s supplementary investment of $500 million to provide “direct support” to Volkswagen, in addition to continued enthusiasm from Deputy Prime Minister Chrystia Freeland.
“We are very confident in the value of the VW investment,” she told media.
“I think the principal point of difference comes when considering the future tax treatment of the VW investment and the PBO…has drawn one conclusion about what that tax treatment will be, and that’s a hypothetical conclusion,” Freeland added.
When asked if that hypothetical conclusion is the wrong conclusion, Freeland simply said “Yes.”
