The Canadian automotive industry is enjoying a surge in vehicle sales so far in 2016. Compared to March 2015, the market grew by 9.3% and saw over 175,000 light vehicles being sold last month. These types of increases are expected to remain, or even grow, further into 2016 as Canadian consumers continue to receive reduced fuel costs.
However automotive manufacturers cannot rely on this trend alone to continue growing. The industry is continuously adapting to consumer preferences, especially the demand for greener, more innovative vehicles. Parts and vehicle manufacturers should make strategic investments now that will lead to their businesses becoming more resilient to future market fluctuations.
Canadian government grants are available for automotive businesses to perform research, development, and large-scale technology adoption activities. Through the Automotive Innovation Fund (AIF), Canadian businesses can receive support to implement projects that increase fuel efficiency and reduce greenhouse gas emissions. Automotive companies with substantial technology-focused projects could receive up to 10-15% of project expenses to a maximum of $80 million.
Automotive Innovation Fund (AIF) Program Objectives
Up to $250 million will be allocated annually from the Government of Canada to support the Automotive Innovation Fund. This Canadian government funding support is designed to improve the competitiveness of Canada’s automotive industry by:
- Increasing the amount of research and development (R&D) activities being performed by automotive companies in Canada;
- Supporting the development of innovative technologies and processes;
- Promoting environmentally sustainable technologies and processes;
- Encouraging job-creation/retention through long-term investments; and
- Catalyzing future investments from the private sector.
Types of Projects Suitable for AIF Automotive Business Funding
The Automotive Innovation Fund will support new research and development projects that provide at least $75 million in investments to the Canadian automotive industry over the next 5 years. Canadian automotive businesses may receive approximately 10-15% of applicable expenses up to $80 million for projects including:
- New product development;
- Innovative engineering and design;
- Prototype development;
- Advanced product testing methods that emphasize fuel efficiency and pollution reduction;
- Designing new production methods and processes;
- Facility development or expansion to produce leading-edge and more energy efficient vehicles and parts; and
- Adoption of productivity and efficiency technologies, such as robotics and advanced IT systems.
Businesses Eligible for the Automotive Innovation Fund
To qualify for Automotive Innovation Fund support, Canadian companies must be incorporated and be able to provide at least $75 million in investments to their project over the next five years. The business should also be profitable and show how its innovative technology or project will use the investment to generate increased profit.
Although AIF has historically supported large automotive companies (Tier 1), businesses are encouraged to apply as long as they are incorporated within Canada. To further discuss your business’ eligibility for this program, contact Mentor Works.
Past Recipients of Automotive Innovation Fund Research and Development Funding
Several Canadian companies have already received research and development funding through AIF. This includes (but is not limited to):
- Linamar Receives $101M in Government Funding for Business Expansion Project: Leading Canadian automotive parts manufacturer, Linamar, will leverage up to $50.7 million in AIF government funding to support a large-scale R&D project valued up to $506.8 million.
- Toyota Invests $421M in Laser Welding and Metal Stamping Technologies: Two of Toyota’s Ontario-based manufacturing plants will receive investments of up to $421 million. Up to $59 million of this investment will be supported through AIF to implement laser welding technologies that are essential for the production of some Lexus vehicles.
How to Apply for AIF Automotive Industry Funding
Due to the size and complexity of this fund, applicants will need to complete a two-phase process to become approved for government contributions.
Phase 1: Innovation, Science and Economic Development Canada (formerly Industry Canada) will assess the proposed project, including the work to be completed and the project’s budget.
Phase 2: If invited to submit a second phase application, businesses will then be required to provide more insight on the project’s benefits (to the company and to Canada) through an assessment of the innovation, environmental benefits, economic benefits, in addition to a review of the company’s managerial capabilities.
Get Started Now: The easiest way for automotive businesses to get started with AIF is to download and complete the Project Expense Planning & Funding Calculator which will identify all of the Canadian government grants and loans available to your business. This calculator will help you understand the total value of funding available to your research and development or business expansion project, then provide next steps on getting started with your applications.
Learn More About the Automotive Innovation Fund (AIF)
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- Automotive Industry on Pace to Secure Over $1.5 Billion in Investments