Canada is spending more to help automakers build out electric vehicle supply chains in the country as part of its yearslong effort to attract new auto investments and, offers manufacturers a 10% subsidy on the capital cost of buildings used in “key segments” of EV production and is designed to build on an existing tax credit Canada passed in 2023 to subsidize 30% of EV makers’ equipment costs.
The credits are part of the government’s response to the 2022 passage by Democrats of the Inflation Reduction Act, which tied subsidies for EVs and batteries to domestic sourcing requirements. Inflation Reduction Act subsidies have sparked fierce criticism from U.S. allies in Europe and Asia, who have argued the law is protectionist and discriminatory against their countries, as well as a potential violation of World Trade Organization rules.
The tax credits are meant to allow Ottawa to incentivize areas of EV manufacturing and production that the Inflation Reduction Act does not.