The Stellantis and LG Energy Solution EV battery plant project in Windsor is back on after the companies secured more financing from the federal and provincial governments.
Deputy Prime Minister Chrystia Freeland, Industry Ministry Ottawa François-Philippe Champagne, Premier Doug Ford and Ontario’s Economic Development Minister Vic Fideli issued a joint statement announcing that an agreement had been finalized.
“Today, our governments are pleased to announce that we have finalized an agreement with Stellantis-LG Energy Solutions (LGES) to create and secure thousands of good-paying auto jobs and tens of thousands of indirect jobs across Canada,” the statement read. “As part of the agreement, Canada and Ontario will provide performance incentives to Stellantis-LGES of up to $15 billion, subject to conditions and benefits to Canada and Ontario.”
The agreement also extends to Volkswagen’s first overseas electric vehicle battery cell manufacturing plant in St. Thomas, Ontario.
“Volkswagen could receive up to $13 billion in performance incentives,” according to the joint statement by federal and provincial officials.
As part of the auto pact for those two deals agreed on by both governments, Ottawa will provide two-thirds of funding and Ontario will provide one-third of funding, for these two projects, as a direct response to incentives offered by the U.S. government. These performance incentives are contingent on, and proportionate to, the production and sale of batteries from each project. Should the incentives offered under the U.S. Inflation Reduction Act (IRA) be reduced or cancelled, so would the performance incentives under the agreement.
The final agreement with Stellantis includes a number of conditions, officials said.
The governments will only provide a performance incentive for batteries that Stellantis produces and sells, in line with the conditions in the agreement for the Volkswagen battery cell manufacturing plant.
Stellantis is expected to uphold its existing commitments in Canada and Ontario, including a production mandate at its plant in Brampton.
The company will also invest more in Canada and Ontario, including for the establishment of a research and development facility in Windsor.
The operating expenses provided will only be available for as long as the U.S. IRA incentives remain in effect. The federal government has agreed to provide Stellantis with a performance incentive on a per unit production basis of up to US$45 per kWh (US$35 per kWh for battery cells and US$10 per kWh for battery modules). Canada’s performance incentive is subject to an overall cap of C$15 billion, of which one-third is to be paid by the Ontario government.
Canada’s automotive sector supports over 500,000 workers, including nearly 100,000 auto plant workers in Ontario. The sector contributes $16 billion annually to Canada’s gross domestic product and is one of the country’s largest export industries.
