Canada has reached an agreement with automaker Stellantis NV to increase government financial support for an electric-vehicle battery plant, ending a standoff that began in May when the carmaker halted construction on the project.
(Bloomberg) — Canada has reached an agreement with automaker Stellantis NV to increase government financial support for an electric-vehicle battery plant, ending a standoff that began in May when the carmaker halted construction on the project.
The plant, built in partnership with South Korea’s LG Energy Solution Ltd., will be located in Windsor, Ontario, across the border from Detroit. It’s expected to cost more than C$5 billion ($3.8 billion) to build.
The project was first announced in March 2022, but the passage of the incentive-rich US Inflation Reduction Act last summer threw a wrench into the process. Canada publicly promised to create a level playing field with the US subsidies, but talks with Stellantis on how to do that dragged on for many months.
“This agreement is good for workers and it is good for Canada,” Canadian Finance Minister Chrystia Freeland and Industry Minister Francois-Philippe Champagne said in a statement Wednesday. “It will create and secure thousands of jobs — both in the auto sector and in related industries across Canada.” They didn’t divulge the cost.
A key obstacle was removed recently when Ontario Premier Doug Ford pledged his government would cover a third of the cost of the subsidies.
The total package is expected to be near, or even exceed, a similar agreement for a Volkswagen AG battery plant that may cost the government more than C$13 billion over a decade, including production subsidies.
Under the Inflation Reduction Act, the Stellantis plant would qualify for as much as C$19 billion in subsidies, according to one expert’s calculation. However, several factors — such as the fact the project was announced before the US subsidy plan existed — may allow Canada to bring that cost down.
At the original announcement, the federal and provincial governments committed about C$1 billion to Stellantis to offset capital costs.
If completed, the 45 gigawatt-hour factory would have 2,500 jobs and supply Stellantis’s assembly plants in North America.
Swedish manufacturer Northvolt AB is also close to a deal to build an electric-vehicle battery in Canada — a project near Montreal that’s expected to be worth about C$7 billion ($5.3 billion), people familiar with the matter told Bloomberg last week.
–With assistance from Mathieu Dion.
(Updates with statement from Canadian cabinet ministers in fourth paragraph. An earlier version of this story corrected the currency on C$19 billion in seventh paragraph)
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