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Ontario gives Magna $48.4-million grant to develop electric vehicle technologiesJOHANNES EISELE/Reuters

The Ontario government's decision to award Magna International Inc. a $48.4-million grant for the development of electric vehicle technologies is a key incentive for the global auto parts giant to conduct research and eventually create more than 700 new jobs in Canada's most populous province.

But the chief executive officer of the Aurora, Ont.-based vehicle parts manufacturer says his company, which is sitting on about $1.5-billion in cash, does not really need the money.

"It is a question that is very front and centre of Ontario's mind. If they announce that they are going to put money out, people will say 'You are a big company, you've got cash, why do you need it?' " said Don Walker in an interview following the government's announcement on Monday.

"We don't need it. If Ontario decided not to give it to us, we might do some of it here but we also will go to where we can get tax relief or other customers or jurisdictions or other countries – somebody says we are going to fund part of it, then we are going to go there. Same with production plants."

The province's funding will form a small part of the company's overall planned investment of $430-million that will be spent over six years on about 19 research and development projects, including some through its Magna E-Car division.

That R&D, which is being funded with a mix of new and previously earmarked monies, will include research on electric car concept development, various parts and components for hybrid and electric cars, and an alternative energy project among others.

The planned job creation, which includes 728 new positions at Magna's Aurora, Brampton, Concord and St. Thomas plants, would occur by 2017, assuming all research projects are successful, the company said.

Ontario is already home to 20 per cent of Magna's global employee base of 104,000.

"They [Ontario]are trying to make sure that we are equally incentivized to do it here as compared to India, China, the States, Germany, Austria – all of the other places we do business in the world," Mr. Walker said.

The province's grant, however, will not stem losses at Magna E-Car and should not be viewed as a reflection of that division's undisclosed cash position, he added.

"The success or failure of the people who are playing in that space – a lot of it is going to depend on research and development."

When asked why taxpayers should be footing part of the bill for one of the world's biggest auto parts suppliers, Sandra Pupatello, Minister of Economic Development and Trade, said the grant would drive Ontario's economy.

"The whole world is chasing Magna to get them to make that half-a-billion-dollar investment in their country that we got in Ontario," she said.

She stressed the funding is contingent on Magna spending its own cash and meeting incremental job growth targets.

The federal government, meanwhile, also announced more funding for research into new clean auto technologies on Monday.

Minister of State (Science and Technology) Gary Goodyear said five new projects would receive funds from the Automotive Partnership Canada initiative.

Those projects include developing a battery pack thermal management system for hybrid electric vehicles, more efficient systems for wheel production, performance-enhancing catalytic converters, enhanced fuel cell technology and improved automotive manufacturing workplace design and ergonomics, the government said in a release.

Out of more than $16-million in total project funding, about $6.5-million will be provided by the Automotive Partnership Canada initiative with remainder coming from industry and other sources.

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