Automotive Innovation Fund (AIF) Shift from Repayable Funding to Government Grants

Honda of Canada was recently awarded with $48.1 million in Canadian government grants through the Automotive Innovation Fund (AIF). This is the first time that the program has provided grants; previously the program only offered repayable funding. Through the announcement, further details were provided on the types of projects that will now qualify for automotive industry grants.

The move is a clear indication that the Canadian government is listening to stakeholders in the auto sector and continually improving their government support initiatives based on their needs. By offering grants, the Automotive Innovation Fund (AIF) becomes more closely aligned with other nations like Mexico and the United States where non-repayable funding is the standard.

It appears nothing else has changed with the program. The Automotive Innovation Fund (AIF) will still provide up to 10-15% of project expenses to a maximum of $80 million in funding, however the contribution will be made as a Canadian government grant. Projects must have a minimum $75 million in eligible expenses to qualify.

Automotive Innovation Fund Grants Welcomed by Manufacturers

There are unique characteristics to each type of funding format. As a loan, the Automotive Innovation Fund provided additional cash flow for the manufacturers to dedicate towards growth and innovation activities such as building new facilities and strengthening their production infrastructure. Although this made it easier for companies to invest, its ability to drive investment (compared to grant-providing jurisdictions) was limited, as that additional cash flow needed to be recuperated through the related return on investment (ROI) or other areas of the business.

Canada’s economy depends on a steady flow of investments from top automotive manufacturers. For every one automotive assembly job created, six more are created through the industry’s supply chain. To ensure more of these jobs can be created and retained in Canada, the government plays a critical role by providing competitive government funding programs.

So, with greater potential to attract investment, Canadian manufacturers should welcome this news. Demand for automotive products and services could soon increase, which will provide widespread benefits throughout the economy.

4 Criteria Determine the Provision of an AIF Grant

The Automotive Innovation Fund (AIF) will still offer repayable funding contributions for some investments, however others will be considered for Canadian business grants. To be considered for a grant (non-repayable funding), manufacturers must meet at least one of the following criteria:

1. Leveraging Advanced Technologies: The development, deployment, or production of technologies that transform the industry. Projects include vehicle lightweighting technologies, connected/autonomous vehicle technologies, and other future-oriented innovations.
2. Investing in Clean Technologies: The development, adoption, or production of clean vehicle technologies. Projects include alternative powertrain systems, vehicle electrification, and other technologies that will help bring vehicle operation to net zero-emission status.
3. Securing Facilities into The Future: The investment in ‘anchor’ manufacturing facilities that will operate for at least 10 years and will create additional benefits such as the deployment of new research and development projects or the establishment of a new head office.
4. Growing Canada’s Automotive Footprint: The significant expansion of manufacturing and/or research and development facilities that contribute to innovation, job creation, and export opportunities.

About AIF Automotive Investment and Research Grants

The Automotive Innovation Fund (AIF) seeks to make Canada the base for automotive manufacturers who are building innovative, green vehicle technologies. It provides funding for the research and development of fuel-efficient, connected, and autonomous vehicles which will be at the forefront of production for years to come.

AIF provides automotive research grants worth up to 10-15% of project costs to a maximum $80 million.

Funding is typically reserved for Tier 1 automotive firms, however other businesses may qualify if they are able to propose a project that provides at least $75 million in value over five years and create/retain a significant number of employees.

Automotive Manufacturers Can Access Canadian Government Funding

The Automotive Innovation Fund (AIF) is just one of many government funding programs available to manufacturers. There are additional government grants to cover the costs of capital investments, research and development, business expansion, and even workforce development.

To discover if your organization is eligible to receive Canadian government funding for upcoming projects, please contact Mentor Works.

Learn More About the Automotive Innovation Fund

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Recent Automotive Innovation Fund News:

• How Connected and Autonomous Vehicles are Driving Innovation
• How Electric Vehicles are Gaining Worldwide Popularity
• Automotive Innovation Fund (AIF) Shift from Repayable Funding to Government Grants
• Automotive Technology Encourages Alert Driving Through Smarter Seats
• Automotive Industry on Pace to Secure Over $1.5 Billion in Investments