Posts Tagged ‘AIF’

Improving Canada's Fuel Economy Standards with the Automotive Innovation Fund

Automotive Industry

Environmentally-friendly vehicles have come a long way in terms of technological advancement and efficiency, but as with anything, there’s always room for improvement. The Automotive Innovation Fund (AIF) is a new program that aims to do just that by providing funding for vehicle and powertrain assembly operations associated with significant automotive innovation to support large-scale research and development (R&D) projects to build innovative, greener and more fuel-efficient vehicles.

It’s no secret that the Canadian manufacturing sector has struggled in years gone by, which is why taking advantage of programs like AIF is so important. The program benefits automotive companies by contributing to the long-term economic benefit for Canada, including job creation and retention. With the fund providing automotive firms $250 million over five years, this will be a much needed boost for Canada’s automotive companies; however, in order to obtain funding companies must adhere to strict qualifying activities that provide extensive automotive innovation and R&D initiatives to develop greener, more fuel-efficient vehicles including:

  • new product development (e.g., advanced emissions technologies, energy-efficient engines and transmissions, advanced materials, including engineered plastics, and lightweight components and materials);
  • leading-edge engineering and design, and prototype development;
  • advanced product testing that ensures cleaner, more efficient automotive performance, and reduces greenhouse gases;
  • development of new production methods and process technologies, including advanced flexible manufacturing techniques;
  • new or expanded facilities to produce leading-edge and more energy efficient vehicles and powertrains;
  • substantive investments in new flexible manufacturing processes; and
  • introduction of other new transformative production technologies to substantially increase productivity and efficiency (e.g., robotics and advanced IT systems).

While Canada is certainly not the worst offender in terms of fuel-consumption, averaging about 34 MPG in 2010 compared to the United States’ 26 MPG, we are still far behind Europe and Japan’s values of 47 and 43 MPG, respectively. Given time, the Automotive Innovation Fund may be Canada’s answer to bringing our numbers in-line with the current leaders in the fuel-economy arena.

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The Automotive Innovation Fund

The Automotive Innovation Fund (AIF) was established in 2008 to support research and development projects to build more fuel-efficient vehicles.  Managed by Industry Canada, the AIF reviews proposals of more than $75 million over 5 years, including vehicle and powertrain assembly, large-scale automotive Innovation, and other R&D initiatives.

For example, in 2009, AIF awarded$54.8 million (up to $365 million by 2013) to Linamar Corporation for their development in fuel efficient powertrains, including:

– The development of powertrain components that contribute to increased fuel efficiency
– The development of advanced production processes to manufacture various powertrain components

When applying for the AIF, it is required that the total assistance from all levels of government be disclosed, including SR&ED.  Eligible costs are limited to non-recurring costs and include labour, material, overhead, equipment, and other costs directly attributable to the project.


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