Cigarettes. Hard drugs. Handing out electric vehicle (EV) battery plant subsidies. All of these are, apparently, highly addictive.
What happened: The federal and Ontario governments have pledged nearly $1 billion in subsidies for a plant in Loyalist Township from Belgian EV battery group Umicore.
- The $2.7 billion plant should be up and running by 2026 and promises to deliver battery materials for over 800,000 EVs a year using Canadian-mined minerals.
Why it matters: Umicore specializes in cathode active materials, which are used in the most expensive part of standard EV batteries (the cathode). Its Ontario plant will be the “first of its kind” in North America, giving Canada a leg up in this vital niche in the EV supply chain.
Zoom out: Southern Ontario is styling itself as the heartbeat of North America’s EV battery industry. The Umicore plant is the province’s third multi-billion dollar factory announcement of the year, following massive subsidy deals struck with Volkswagen and Stellantis/LG.
- The federal and Ontario governments spent $28.2 billion in production subsidies for EV battery plants before the Umicore deal, a sum which will take 20 years to recoup, per the Parliamentary Budget Officer. Maybe make it 21 with this new deal?
Yes, but: The investments won’t pay off at all if imagined EV demand doesn’t become a reality. The EV sales rate in the US (the biggest market for Canada’s batteries) has slowed, and Canadians are less likely to buy an EV for their next car than they were last year.—QH