EV Jobs to grow as Volkswagen awarded massive subsidies, despite checkered history!

The announcement that the government of Canada has awarded Volkswagen a package of subsidies and tax credits that could reach to $13-billion to manufacture electric vehicle (EV) batteries in Canada has been met with mixed reactions.

While many applaud the move towards electric vehicles and the potential for job creation, others are concerned about the ethics of awarding such financial aid to a company that has been found guilty of defrauding the public.

Massive Job Creation Forecast

The growing Canadian EV market size and massive job projections are an irresistible economic driver for government as well as private investment.

As of the third quarter 2022, plug-in market share has reached an average of 7.7% of all new vehicles across Canada for the year to date. This trend tracks well with the predictive model that forecasts an annual national market share of 7.32% in 2022 and continued growth from there.

The subsidies to Volkswagen are projected to create 3,000 direct jobs. Apparently, the application of most of the subsidies and credits will come into effect after the company builds the $7 billion plant and begins production and are tied to performance, such as the number of batteries sold.

According to an April 24 article in The Globe and Mail, ‘Volkswagen is undoubtedly laughing all the way to the bank’ which points out ‘It is difficult to say how many spinoff jobs will be created, but there is no guarantee those will all be in Canada, given the integrated nature of the U.S. and Canadian economies.

Volkswagen’s ‘Emissionsgate’ Scandal and Dirty Money

In 2015, Volkswagen was caught cheating on emissions tests in what became known as the Dieselgate or Emissionsgate scandal. The company admitted to installing software in millions of diesel vehicles that allowed them to cheat on emission tests and emit up to 40 times more pollutants than allowed by law. The scandal led to billions of dollars in fines and legal settlements, as well as a loss of trust in the company and the automotive industry as a whole.

To learn more about the scandal, see the Dirty Money episode titled “Hard NOx”, which delves into Volkswagen and their 2000’s emissions scandal, where they intentionally deceived the public and environmental regulatory bodies with their “clean diesel” car models. Spoiler alert: this superior diesel cleansing engine doesn’t exist, and never did.

The emissions scandal cost Volkswagen billions of dollars. Volkswagen itself reported its ‘diesel cheating scandal has cost it 31.3 billion euros ($34.69 bln) in fines and settlements’, as stated by Reuters.

A History that Starts with Nazi Related Origins and Slave Labour

The Volkswagen name is derived from the German-language terms Volk and Wagen, translating to “people’s car” when combined.

Volkswagen was founded in 1937, as part of Nazi leader Adolf Hitler’s vision to enable German families to own their first car. During World War Two, the Wolfsburg-based firm manufactured vehicles for the German army, using more than 15,000 slave labourers from nearby concentration camps.

According to Encyclopaedia Britannica Volkswagen Group, also called Volkswagen AG, was originally operated by the German Labour Front (Deutsche Arbeitsfront), a Nazi organization

In 2019, the BBC ran a story titled “Volkswagen boss apologises for Nazi gaffe” in which ‘the chief executive of Volkswagen has apologised for evoking a Nazi slogan to describe the importance of boosting the group’s profits. Herbert Diess used the line “Ebit macht frei” at a company event. The phrase echoes the maxim “Arbeit Macht Frei” – meaning “work sets you free” – which was famously emblazoned in wrought-iron on the gates of the Auschwitz concentration camp. Ebit is a commonly used acronym for “earnings before interest and taxes”.’

Many Canadians are questioning the government’s decision to award such a large financial package to Volkswagen based on economics alone. After all, as the National Post stated, ‘it is, by a long shot, the largest corporate welfare payout in modern Canadian history’.

Given Volkswagen’s history, one could also argue that the government is sending a message that it’s okay to cheat and defraud the public as long as you promise to invest in Canada, as well as electric vehicles and the green economy. Others could argue that the government should be investing in Canadian companies and supporting the development of domestic electric vehicle production instead of investing in foreign companies.

A Step Toward Greater Sustainability and a Greener Future

However, there are also those who argue that the package is a necessary step towards a greener future and a sustainable economy. Electric vehicles are seen as a key part of reducing greenhouse gas emissions and combating climate change, and investing in their production is a necessary step towards this goal. In addition, the job creation and the potential to stimulate the Canadian economy are especially important in bolstering Canada’s manufacturing sector and its economy.

A new report from Clean Energy Canada (CEC), dubbed New Reality, projects a bright future for Canada’s clean energy sector, with the economy and jobs set to see the biggest jumps in growth. In their report called “The New Reality”, Clean Energy Canada outlines fossil fuel’s decline, and the rapid growth in Canada’s clean energy sector, which it states will more than make up the difference.

Long-haul Trucks will Require EV Batteries Weighing 8,000 lbs Each

The long haul trucking sector’s need for more EV battery technology will be gigantic and is set to grow exponentially. The transportation industry will not just require a greater number of EV batteries, but it will require much larger batteries. In the recent U.S. EPW Subcommittee Hearing on Vehicle Emission Standards and Clean Vehicle Investments, Andrew Boyle, First Vice Chair of the American Trucking Association and Co-President of Boyle Transportation, testified that “each electric vehicle battery for a   heavy-duty truck battery weighs 8,000 lbs, and you’d need at least two of them, so we are talking the weight of four or five cars”. He went on to say that some of the trucks may require up to eight of these heave batteries. Do the math! 

Labour Impact of Canada’s Green Energy Sector, by the Numbers

The 2021 report highlights the following EV Sector statistics and its growing segment of the labour market in Canada.

  • In 2020, Canada’s clean energy sector already employed 430,500 people. By 2030, that number is projected to grow almost 50% to 639,200. At the same time, Canada’s fossil fuel sector will see a 9% drop in employment.
  • The clean energy sector’s GDP is forecast to grow by an impressive 58% by 2030—significantly more than the 9% growth expected in fossil fuels.
  • Clean energy jobs in Alberta are set to increase 164% over the next decade—the greatest increase of any Canadian province—while Saskatchewan will also see clean energy jobs double.
  • Oil and gas may have dominated Canada’s energy past, but it’s Canada’s clean energy sector that will define its new reality.
    (Full report available via the source links below)

So, What to Make of the Government’s Decision to Massively Subsidize Volkswagen?

On the one hand, it’s important to hold companies accountable for their past mistakes and ensure that they are not rewarded for unethical behaviour. On the other hand, it’s also important to support the development of green technologies and a sustainable economy.

Ultimately, the key is to strike a balance between these two. The government should ensure that companies that receive such massive financial aid packages are held to high ethical standards and are committed to transparency and accountability. At the same time, it should also prioritize investments in Canadian companies and domestic production, and assure that the benefits of these investments trickle down to all Canadians.

Volkswagen’s new electric vehicle battery factory is slated to open in 2027, in St. Thomas, Ontario. The factory is the first of its kind in Canada.

As for the number of jobs Volkswagen’s new “gigafactory” will produce, the CBC reported the new ‘plant in St. Thomas will mean jobs for Windsor-Essex too as it helps cement the broader area as an electric vehicle (EV) hub.

That’s according to industry pros, who say Windsor will be even more attractive to supply chain manufacturers when there’s another EV battery plant within a two-hour drive.

Windsor is already the future home of a Stellantis EV battery plant, which will employ about 2,500 people when it opens in 2024. The number of jobs is still unknown, but it could be in the thousands.’

What’s the Actual Cost to Canadians?

In conclusion, the decision to award a $13-billion aid package to Volkswagen to manufacture electric car batteries in Canada is complex. While the package has the potential to support a sustainable economy and reduce greenhouse gas emissions, it’s also important to hold companies accountable and ensure that third party auditing of the resulting ESG benefits and economic impact are fact-checked and are in no way misrepresented, and all parties are held accountable for their part in managing such a massive investment, and assure it’s to the benefit of Canadian taxpayers.