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Archived — Automotive Innovation Fund—program details and criteria

The call for applications of Automotive Innovation Fund has closed. For newer funding for dynamic and emerging firms in high-growth sectors, visit the Strategic Innovation Fund.

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:

  • build automotive research and development (R&D) capacity in Canada and secure knowledge-based jobs through the growth of a strong automotive industry;
  • enhance the government's inclusive innovation, science and technology (S&T) and environmental agendas;
  • support the development and/or implementation of innovative, fuel efficient technologies or processes;
  • promote long-term economic benefit to Canada including significant job creation/retention;
  • serve as catalyst for further private sector investments to foster Canadian competitiveness, including investments in production equipment or processes and next-generation manufacturing technologies.

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:

  • new product development, e.g., advanced emissions technologies, energy efficient engines and transmissions, advanced materials, including engineered plastics, light weight components and materials;
  • leading edge engineering and design, prototype development;
  • advanced product testing with a view to ensuring cleaner, more efficient automotive performance and reduced greenhouse gases (GHGs);
  • the development of new production methods and process technologies, including advanced flexible manufacturing techniques;
  • new or expanded facilities that generate significant economic benefits, including employment;
  • substantive investments in new flexible manufacturing processes; and
  • introduction of other transformative new production technologies to substantially increase productivity and efficiency (e.g., robotics, advanced IT systems, etc.)

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:

  • regular maintenance, operation costs, regular retooling of facilities;
  • replacement technology without substantive improvement in productivity and energy efficiencies;
  • restructuring, mergers and acquisitions with minimal contribution to Canada's economic and environmental objectives; and
  • consolidation of traditional product lines without substantive new productive capacity or contribution to Canada's new fuel consumption objectives.

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

  • A description of the applicant (legal structure, ownership, management, business experience, financial statements for the years covered by the project, technical team, etc.);
  • A demonstration of how the applicant meets the eligibility criteria of the program;
  • Assurance that the applicant is in good standing with regard to all federal, provincial, territorial and municipal laws and regulations;
  • Corporate documents such as articles of incorporation, corporate by-laws and related instruments;
  • Affirmation that any person including any consultant or in-house lobbyist who lobbies on its behalf to obtain funding under AIF and who is required to be registered pursuant to the Lobbyists Registration Act is registered pursuant to that Act;
  • Affirmation that the applicant has not and neither has any person on its behalf:
    1. engaged or employed any person for the purposes of obtaining AIF funding; or
    2. required any employee or official to solicit AIF funding; and paid, or agreed to pay, that person, employee or official a commission, contingency or success fee or any other consideration (whether monetary or otherwise) that is dependant upon the applicant receiving AIF funding;
  • Assurance that any former public servant, that derives benefit from the contribution agreement, will be in compliance with the Values and Ethics Code for Public Servants, and the Conflict of Interest Act;
  • Assurance that any former public servant and company official, that derives benefit from the contribution sgreement, will be in compliance with the Lobbyist Registration Act; and
  • Assurance that no member of the House of Commons or Senate will benefit from the contribution.

Project information

  • Project proposal, workplan, and budget addressing the overall context/objectives and goals of the project, as well as major activity areas and key project performance milestones as well as the planned schedule of repayments;
  • The forecasted total cost (eligible and ineligible costs) of the project, and details of financing;
  • The amount of any federal, provincial, territorial or municipal assistance or tax credit, received or likely to be received for the project;
  • The names of those officers responsible for the project, with details on the qualifications of the key individuals carrying out the proposed work;
  • Details on how the project and the applicant will meet the assessment criteria; and
  • Information on all other funding applications made by the applicant, including the organizations from which assistance was requested and the amount requested, as well as the outcome of the applications.

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:

  • that the project contributes to the strategic objectives of the government, including significant innovation, environmental and economic benefit to Canada;
  • that the project is technologically feasible, and that the applicant possesses, or can reasonably be expected to secure, the requisite technological and managerial capabilities, and financial resources, to achieve the stated objectives of the project;
  • that a contribution under AIF is necessary to ensure that the project (either individually or as part of a portfolio of related activities of the applicant) proceeds with the desired scope, timing or location; and
  • that a repayable contribution would be repaid.

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

  • nature and degree of strategic technology innovation and/or excellence that is new to Canada;
  • feasibility of strategic activities leading to technological innovations in product, process or service applications;
  • advancement of industrial know-how by adopting international best practices to Canada;
  • extent and manner in which existing Canadian strengths and capabilities in automotive technology development can be strengthened;
  • degree to which Canadian companies are enabled to participate more strategically in major automotive platforms and global value chains; and
  • potential for managing technology spill-over and diffusion to deepen automotive supply chain capabilities.

Environmental benefits

  • sustainable reductions to air pollutants and greenhouse gas emissions, arising from either the use or manufacture of vehicles and their constituent parts and systems;
  • contribution to new environmental technologies and objectives, including lightweight materials technologies and applications;
  • impact on end-of-vehicle life recycling rates and costs; and
  • estimated impact on levels of private sector investment in S&T related to the environment and human safety.

Economic benefits

  • nature of the opportunities provided to Canadians to contribute to a highly skilled and knowledge-based workforce;
  • impact on productivity and competitiveness of Canadian firms for the benefit of all Canadians;
  • contribution to achieving the goals of Canada's S&T Strategy, in particular: increasing the level and commitment of the private sector to undertake R&D in Canada; strengthening Canada's knowledge base and attracting to Canada international talent;
  • impact on increasing the supply of highly qualified and globally connected workforce supporting businesses; and
  • collaborative partnerships with post-secondary institutions or public research institutes.

Company capability to achieve the stated objectives

  • financial resources, management expertise, business plan to achieve benefits;
  • technical team's experience to conduct the project; and
  • ability to repay the contribution.

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):

  • Leveraging advanced technologies: Development, deployment, or production of key industry technologies that are shaping the direction of the automotive industry and that build on Canada’s technological strengths, helping position Canada as a global industry leader, including, but not limited to: light-weighting, and other new material formulations or processing techniques; connected and autonomous vehicle technologies; and vehicle software, hardware and other future-oriented information technology innovations;
  • Investing in clean technologies: Significant development, adoption and/or production of clean vehicle technologies and other innovative products that promote Canada’s climate change and environmental agenda, including, but not limited to, alternative powertrain, including fuel cell and fuel storage systems, vehicle electrification (including controls and/or performance optimization), and other zero-emission vehicle technologies;
  • Securing existing facilities into the future: Investments necessary to secure globally significant mandates (immediately or in the future) that will serve to anchor facilities over the longer term (ten or more years), and that will help attract and retain further investment (spillover benefits), including investments in significant productivity improvements, strategic partnerships, and deployment of head-office or R&D functions related directly to the implementation and operation of the project within Canada;
  • Growing Canada’s automotive footprint: Establishment of greenfield or expanded manufacturing or R&D facilities that will significantly contribute to innovation, job creation and global value chain opportunities.

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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