Automotive Innovation Fund—program details and criteria

Program objectives

The Automotive Innovation Fund (AIF) provides repayable and non-repayable contributions to automotive companies in support of strategic, large-scale research and development projects in the automotive sector to build innovative, greener and more fuel-efficient vehicles. This will help Canada leverage its ability to maintain and grow its critical mass of automotive manufacturers, parts suppliers, and R&D and technology clusters in order to enhance a strong innovative and knowledge-based economy.

The objectives of the AIF are to:

Eligible recipients

Eligible recipients are corporations incorporated pursuant to the laws of Canada carrying on business in Canada with proposals for investments in Canada valued at more than $75 million until March 31, 2021, for vehicle or powertrain assembly operations associated with significant automotive innovation and R&D initiatives. Automotive innovation and R&D initiatives other than vehicle or powertrain assembly are also eligible provided they meet the $75 million threshold.

Eligible projects and eligible activities

Eligible projects for funding under the AIF are those projects with a total private sector investment valued at more than $75 million until March 31, 2021 and comprising eligible activities.

Eligible activities mean significant automotive innovation and R&D initiatives to develop and build greener, more fuel efficient vehicles, inclusive of:

Eligible projects must require government funding to meet the scope, location and timing of the proposed eligible project. eligible projects will typically have an implementation period of up to March 31, 2021, though exceptions will be considered on a case-by-case basis.

Ineligible activities under the AIF are those that do not meet program objectives and may include:

Eligible costs

Eligible costs are those incurred and paid by the recipient and which are necessary and reasonable to carry out the eligible activities to which they relate, as outlined in the project's statement of work. Eligible costs will be limited to non-recurring costs and will include labour, material, overhead, specialized equipment and other costs which are attributable to the project. The program will consider on a case by case basis costs associated with land and buildings.

Costs associated with land and infrastructure must be, necessary and reasonable to carry out the eligible activities to which they relate, such as construction costs of new plants and/or existing plants that house or contribute to significant R&D activities.

The AIF may support retroactive reimbursement of eligible project costs incurred and paid prior to the signing of the contribution agreement on a case by case basis. This is due to the length and complexity of strategic large-scale projects in the automotive sector. Costs supported on a retroactive basis will not exceed 20% of the total eligible costs of the project. The Minister shall not reimburse an applicant for eligible costs incurred and paid should the applicant’s proposal be rejected.

Stacking provisions and other government assistance

The assessment of the required level of assistance will take into consideration the total assistance from all levels of government (e.g., federal, provincial and municipal assistance). This includes assistance such as all grants and contributions being considered, implicit subsidies, forgivable loans, investment tax credits and any other grant or contribution.

Contributions under these terms and conditions will respect the government policy on stacking, which generally limits total government assistance to 50% of eligible costs of industrial development projects, and to 75% of eligible costs of industrial research projects and other types of industrial projects.

Supporting documentation required from applicants

Applicants will be required to submit sufficient information to allow for assessment against the criteria for the program. This could include:

Organizational information

Project information

Assessment criteria

All applications for contributions under the AIF will be assessed for their suitability for AIF funding in the context of their relevance to the objectives of the AIF. The AIF will establish reasonable but high standards for assessing project proposals.

Overall, applications will be assessed in terms of the extent to which they demonstrate:

Assessment process

The proposals of applicants will be assessed by Innovation, Science and Economic Development Canada (ISED) in accordance with a three-phase process.

Phase one

Eligible recipients will be required to demonstrate that proposed projects meet AIF Program objectives.

Phase two

Subject to meeting the program objectives, the project will be assessed by ISED in accordance with the following program benefits:

Innovation benefits

Environmental benefits

Economic benefits

Company capability to achieve the stated objectives

Phase three

Non-repayable contributions will only be considered for eligible projects that demonstrate high strategic value and global significance. The following criteria will be used to measure such additional project benefits, which will be applied to eligible projects, to be considered for a non-repayable contribution (either in whole or in part):

Projects meeting one or more of these criteria will be considered for non-repayable contributions, given that the eligible recipients have clearly demonstrated their capability to achieve the stated objectives. This includes, but is not limited to: information regarding financial resources, experience, management expertise, and performance measurement strategies. In all cases, as a key indicator of eligibility for funding under the AIF, it is expected that projects will also secure provincial funding.

Due diligence

Each eligible project considered for funding under the AIF will be subject to a comprehensive due diligence process that will examine the feasibility of the proposed eligible project, and the Eligible Recipient’s ability to deliver on the proposed benefits of the eligible project. Due diligence will be conducted by ISED with support from experts within ISED, from other departments/government organizations, and external experts, as needed. All eligible projects will be analyzed to determine the relative technological, management and financial risk, as well as the likelihood of achieving the forecasted benefits. Proposed eligible projects successfully completing due diligence will be recommended to the Minister for approval.

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