THE NEW FEDERAL BUDGET TO THE RESCUE OF OUR AUTO INDUSTRY

By Éric Descarries

Among the interesting news announced in Ottawa’s latest federal budget, there is one that concerns the Canadian automotive industry more than the general public. In fact, when we look at the 2023 budget, we see that it includes a refundable tax credit intended to strengthen investments in the production of electric vehicles and batteries and their components.

According to the Automotive Parts Manufacturers Association (APMA), Global Automakers of Canada (GAC) and the Canadian Vehicle Manufacturers Association, this announcement is a direct response to similar U.S. initiatives in the Biden Administration’s Inflation Reduction Act of last year, which will allow Canadian industries to compete on a level playing field with their American competitors.

Some 30% of the investment tax credit will apply to new machinery and equipment used to produce or process green technologies, and extract, process, and even recycle minerals, including lithium, cobalt, nickel, graphite, copper and certain rare earth elements.

Add to this the production or renewal of nuclear energy equipment, the processing or recycling of nuclear fuels or heavy water, the construction of electrical energy storage equipment, the construction of zero-emission vehicles, in addition to the production of components and materials associated with all of the above, including cathode materials and batteries used in electric vehicles.