July 15, 2024
Canada offers more money to Stellantis for EV battery plant

ST. CATHARINES, Ont. — Ontario Premier Doug Ford says the province is offering more money in a bid to keep automaker Stellantis from pulling out of building an electric-vehicle battery plant in Windsor, Ont.

Stellantis and LG Energy Solution announced last year that they were building the $5-billion plant, but have in recent days stopped construction and warned they were implementing contingency plans because the federal government hasn’t lived up to an agreement.

The CEOs of the two companies wrote last month to Prime Minister Justin Trudeau, saying Ottawa had confirmed in writing five times that it would match production incentives under the United States’ Inflation Reduction Act, but has not delivered on those commitments.

But the federal government has been pressuring Ontario to pitch in as well, saying the province also has to pay its “fair share.”

Ford has said he is disappointed with how the federal government has handled the issue since the province didn’t make those production subsidy commitments, but said he is working with officials in Ottawa.

“I will confirm we’re putting more money on the table,” he said after an unrelated announcement in St. Catharines, Ont.

“This is all about saving jobs and giving people the quality of life they deserve in southwestern Ontario.”

The premier wouldn’t say how much, in order to protect those jobs.

Construction at a portion of the NextStar Energy plant – a joint venture between the automaker and LG Energy Solution (LGES) –   was halted May 15 after the companies accused the federal government of not living up to promises to match incentives contained in the U.S. Inflation Reduction Act. The automaker also warned that it was making contingency plans – a sign that it was willing to move the project across the border.

The plant, expected to employ 2,500 people and slated to begin production next year, would be capable of producing 45 gigawatt-hours of lithium ion cells and modules annually to feed Stellantis plants in Canada and the U.S.

Construction on the module portion of the plant was stopped, but work continued elsewhere on site.

The automaker has been accusing Ottawa of reneging on a previously made promise, alleging the federal government had “not delivered on what was agreed.”

Stellantis’ frustration with the pace of federal government negotiations appeared to heat up after Canada signed a deal April 21 of this year with Volkswagen for a battery gigafactory in St. Thomas, Ont. The federal government has committed to provide up to C$13.2 billion ($9.8 billion USD) in manufacturing tax credits to VW through 2032, while Europe’s largest carmaker is investing up to C$7 billion to build the plant.

The incentives nearly match those in the Inflation Reduction Act, which includes an incentive of US $35 per kWh of cell production and a US $10 per kWh incentive for battery module production.

Cells and modules are two separate parts, both to be assembled at the Windsor site.

Volkswagen will receive no federal support for battery modules made in St. Thomas., according to Hans Parmar, a spokesperson for Innovation, Science and Economic Development Canada.

Meanwhile, the province put up C$500 million for both deals, Ford previously said, and is ensuring roads and energy for the plants.

Flavio Volpe, head of the Canadian Automotive Parts Manufacturers’ Association praised the premier.

“Doug Ford stepping up in a crisis is on brand. And I wouldn’t expect the premier to make a statement if he wasn’t certain we solved this,” Volpe said. “We’re back on track. Hopefully we can pick up the momentum we started with this deal.

“All we’ve signaled to other investors is that details matter. We don’t have a standing tax credit, so you’re going to have to negotiate terms, and get it right the first time.”

The news pleased Unifor Local 444 President Dave Cassidy, who represents hourly workers at the Stellantis Windsor Assembly Plant, where minivans are currently made but will soon be swapped out for new electrified product.

“Like my father always told me, stick and stay and it’s bound pay. I expected this. I knew he’d [Ford] come through. He’s been very clear about it,” Cassidy told Automotive News Canada.  Cassidy said he has been in regular contact with the premier. 

“This is a great day, that we’ve just solidified this.”

Stellantis declined comment on the matter Friday.

With files from Automotive News Canada and the Canadian Press.

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