Harper, McGuinty pledge $34M for Canadian-made hybrid car

The federal and Ontario governments are providing as much as $34 million to Toyota Motor Manufacturing Canada to produce a hybrid car built in Ontario.

Prime Minister Stephen Harper announced Wednesday at the Toyota plant in Cambridge, Ont. that the federal money would come from the Automotive Innovation Fund.

Outgoing premier Dalton McGuinty said Ontario's portion will come from its Strategic Jobs and Investment Fund.

Toyota will put $125 million toward the new assembly line to increase production of Lexus luxury cars, including a new model with a hybrid gasoline-electric engine. The project will lead to the first Lexus hybrid produced outside of Japan.

Toyota plans to manufacture a hybrid version of the Lexus Sport Utility Vehicle beginning in 2014. The initiative is expected to create 400 jobs.

The project will involve building a new blended assembly line that will permit increased production of the current Lexus model.

Federal fund unveiled

Earlier this month, Harper announced the renewal of a fund to stimulate research and innovation in Canada's automotive industry.

The fund was established in 2008 as part of efforts to help Canada's struggling automotive industry early in the last recession.

The fund required manufacturers to put up some of their own money before applying for funding targeted at specific research and development projects. The subsidy program was touted as an incentive to automakers to keep their Canadian plants open and protect domestic jobs.

The Jan. 4 announcement committed another $250 million to the fund over five more years.

Under the original fund, the federal government contributed repayable loans to four companies, with Toyota eligible for up to $70.8 million for developing more fuel-efficient vehicles, including electric vehicles.

Today's contribution is the fifth one from the federal Automotive Innovation Fund.

Previously, Ottawa provided $80 million toward an investment of as much as $730 million by Ford to establish an engine assembly plant and powertrain research centre in Windsor, $54.8 million to Linamar Corporation to develop new parts, $70.8 million to Toyota to permit the production of more fuel-efficient vehicles, and $21.7 million Magna to develop energy-efficient auto parts.

With files from The Canadian Press