Mr. Speaker, with regard to part (a), after production ramp-up and assuming full capacity utilization of 90 gigawatt hours, the value of battery production from the PowerCo plant is estimated to reach $200 billion in less than 15 years, which is well within the average lifespan of a plant in this sector. The calculation is based on the average price of a battery cell in 2022 multiplied by an annual production rate of 90 gigawatt hours.
With regard to part (b), Volkswagen is investing $7 billion to establish its first overseas electric vehicle battery manufacturing plant in St. Thomas, Ontario.
Canada has committed to providing PowerCo with production support to match the advanced manufacturing production credit in the United States’ Inflation Reduction Act, equalling $35 U.S. per kilowatt hour for battery cells. Canada’s support will only be provided for what is produced and sold, and will phase out by 25 percentage points every year beginning in 2030. After 2032, the credit would be eliminated. The agreement also has the flexibility to be adjusted should the U.S.’s advanced manufacturing production credit be changed. For PowerCo, this means support ranging between $8 billion and $13.2 billion depending on production levels, two-thirds of which will be provided by Canada and one-third of which will be provided by Ontario.
Canada will also provide funding under the strategic innovation fund, SIF, for capital expenditures of up to $700 million for PowerCo.
With regard to part (c), the figure in part (a) is estimated based on the average price of a battery cell in 2022 of $120 U.S. per kilowatt hour, per BloombergNEF, converted to Canadian dollars using the average Canada-U.S. exchange rate for 2022, which was one dollar U.S. for $1.3013 Canadian, multiplied by the production rate of 90 gigawatt hours over a 15-year time period.
The figures in part (b) are the publicly reported value of Volkswagen’s investment and the funding committed to by the Government of Canada.