ISED has a need for speed.

The federal government wants the luxury vehicle maker and 19-time 24 Hours of Le Mans race winner Porsche in its auto-manufacturing stable. 

An October 2022 Innovation, Science and Economic Development Canada briefing note, obtained by The Logic through an access-to-information request, details the federal department’s goals ahead of a meeting between Innovation Minister François-Philippe Champagne and Porsche executives. Those executives—Michael Steiner, Barbara Frenkel, and Markus Graef—respectively lead research and development, procurement, and the joint venture battery subsidiary Cellforce for the automaker. 

The Porsche supply chain is, at a glance, an unlikely trophy for Canada, given that the company’s vehicle production is focused in Europe, China and Malaysia. Canada also recently levied a tax on luxury goods that has drawn the ire of auto dealers, and Ontario Premier Doug Ford has declined to offer provincial EV rebates because “I’m not going to give rebates to guys that are buying $100,000 cars.” 

But the briefing note hints at the government’s areas of interest. ISED has “discussed Porsche’s current supply agreements” with the chemical giant BASF, which is building a Canadian battery-material plant. The note also encourages the minister to ask about whether Porsche’s high-performance battery plans overlap with its parent company, Volkswagen, which itself is in talks to build a Canadian battery plant. 

ISED didn’t directly answer The Logic’s question about whether the VW plant could make Porsche batteries. In an emailed statement, ISED senior communications manager Laurie Bouchard said that Champagne is working to “secure the future of Canada’s auto industry, including bringing more companies to Canada and the entire electric-vehicle ecosystem.” Porsche Canada said it cannot comment on future projects. 

Luxury-vehicle sales are outpacing the rest of the industry, and 17 per cent of Porsche sales were electrified in 2021. Meanwhile, it benefits from Volkswagen’s relationships with Umicore, which is building a Canadian plant, and OMERS–backed battery maker Northvolt, in which VW is also an investor. Porsche is building its 10th “brand park and major tourist destination” near Toronto, which looks to be a Legoland-like destination for car enthusiasts.

The October 2022 note marks at least the second meeting between Porsche and ISED, after Champagne met with Steiner in Europe in November 2021. Since then, Russia’s invasion of Ukraine has disrupted the automaker’s supply chain and the U.S. has passed the Inflation Reduction Act, which would make EVs with Canadian assembly or minerals eligible for rebates. 

Yet to be seen is how Canada’s government will match U.S.-specific battery-manufacturing incentives like the Advanced Manufacturing Production Tax Credit, which covers 10 per cent of electrode active material costs and $35 to $45 per kilowatt-hour of battery production. ISED did not answer a question about whether Canadian production would exempt a company from the new luxury taxes, but the Finance Department said the luxury tax applies to cars over $100,000 whether they are delivered in Canada or imported.

With files from Murad Hemmadi

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