Whoa, Hold on There: The New Pile of Canadian Cash Available to Automakers Just Shrank

Matt Posky
by Matt Posky

(Update: The initial story detailing new Canadian auto incentives was published on January 12. It has been updated to reflect new information.)

Canada’s new government-funded incentive program for automakers isn’t as generous as initially reported.

Last week, the federal government made changes to the Automotive Innovation Fund to allow car manufacturers, parts suppliers and R&D companies access to conditional grants that do not require repayment. Unfortunately, a communications slip-up at the country’s Ministry of Innovation, Science and Economic Development made the pile of cash a whole lot taller than intended.

According to Automotive News Canada, the amount of money available for non-repayable grants is $500 million (CAD) through 2021, not $500 million per year. That’s one-fifth of what was originally reported.

The previous AIF guidelines made the capital available in the form of interest-free, but repayable, loans. After the changes were announced, former Toyota Canada chairman Ray Tanguay said the updated program is at least as good as what is available in the southern United States and Mexico. It’s unknown whether he was speaking to the right sum of money.

“This is a government that is finally listening to many, many years of requests. In order to be competitive, we have to have an AIF that is not an interest-free loan, it has to be a grant,” Tanguay told Automotive News Canada last week.

“I think our incentives for the green fields are OK compared to Mexico,” he explained. “Yes, some of the United States still have very generous incentives. But I think our incentives are better.”

As the official “Car Czar” to the Great White North, Tanguay serves as the automotive advisor to Ontario, and is partially responsible for locating investments into Canada’s automotive industry.

The free meal does come with a few stipulations, however. Non-repayable grants can only be used for developing advanced technologies like autonomous vehicles or composite materials, securing existing facilities for future use, investing in clean technologies (meaning zero emissions), expanding existing facilities, or establishing a greenfield.

Any companies that don’t qualify for the conditional free money can still apply for repayable loans under the old AIF guiltiness.

Honda was the first automaker to take advantage of the automotive fund. On Monday, it announced it would be investing $492 million (CAD) to upgrade the Alliston, Ontario plants that build the CR-V and Civic. Because Honda says that a large portion of that money is going toward a new paint shop that cuts greenhouse gas emissions by 44 percent (while also ensuring jobs), Canada’s federal government is kicking in $41.8 million in grants.

While parts of the United States will happily offer massive incentives to automakers willing to build new factories in their part of the country, it’s rare to find a jurisdiction that pays car companies to update their facilities.

[Image: Fiat Chrysler Automobiles]

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • Redapple Redapple on Jan 13, 2017

    Gentlemen. Free Trade is one thing (wild west. not many checks and balances) Fair Trade is something else. In 2004, the American Foundry Society brought a suit to the FTC I believe. The AFS said, ' hey man, China is Cheating." They are supplying 10 pound aluminum castings to Detroit for $12 dollars. Delivered. Aluminum was $1/lb then. That china casting had 10$ in Aluminum in it. Plus the labor, burden, freight, fettling etc. So even offshore, the casting should have costed $20 or so. COST not price. This is an example of Free Trade. This is what has closed 50,000 manufacturing plants and ended 10,000,000 direct manufacturing jobs over the last 15 years. The new president says Fair trade may be a better way. You Choose.

    • See 2 previous
    • OldManPants OldManPants on Jan 16, 2017

      @Lou_BC People are the new buggy whips.

  • Redapple Redapple on Jan 17, 2017

    RE The Picture. Interesting plant. Brampton I Guess. I ve tooled up Assy plants for - obviosuly - GM. Any body know why the car is complete- ready for paint, except, no front left quarter panel?

  • CanadaCraig VOTE NO VW!
  • Joe This is called a man in the middle attack and has been around for years. You can fall for this in a Starbucks as easily as when you’re charging your car. Nothing new here…
  • AZFelix Hilux technical, preferably with a swivel mount.
  • ToolGuy This is the kind of thing you get when you give people faster internet.
  • ToolGuy North America is already the greatest country on the planet, and I have learned to be careful about what I wish for in terms of making changes. I mean, if Greenland wants to buy JDM vehicles, isn't that for the Danes to decide?
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