Canada will offer substantial incentives worth billions of dollars as part of its strategic cooperation with multinational automaker Stellantis and its partner LG Energy Solutions for a new electric vehicle battery factory in Windsor, Ontario.
The $3.8 billion battery joint venture will primarily support EV production in the North American market. The federal government recognized the JV as the biggest-ever investment in Canada’s automotive industry.
However, Stellantis postponed the battery factory project in May due to Canada’s failure to deliver its pledged subsidies. Finally, the local government and the JV concluded a final agreement.
Stellantis-LGES JV secures up to $11bn subsidies from the Canadian government
In a Thursday statement, the local government of Ontario and Canada declared that they would provide the battery project with up to $11bn (15 billion Canadian dollars) “performance incentives” as part of the finalized deal.
“Today’s announcement will protect and create thousands of good-paying jobs for workers, including unionized jobs, as we establish an end-to-end electric vehicle supply chain to strengthen the clean economy.”
Government of Ontario
The governments further asserted that the deal would also include Volkswagen’s enormous EV battery cell production plant in St. Thomas, approximately 190km (118 miles) east of Windsor.
In that sense, VW may get incentives of up to $9.7bn (13 billion Canadian dollars), as per the local governments.
“As part of the auto pact for those two deals agreed on by both governments, the federal government 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 US government.”
Government of Ontario
Why Canada?
Canada boasts a substantial mining industry for critical minerals essential for EV production, including lithium, nickel, and cobalt.
That said, the government has been offering substantial incentives to establish a profitable and healthy business environment for electric vehicles, as it aims to attract significant investment from major players worldwide.
“This step will spur further growth across Canada and Ontario’s auto manufacturing supply chains, and related sectors, benefitting workers and unions throughout the country.”
Government of Ontario
The government’s latest statement indicated that the performance incentives are “contingent on, and proportionate to, the production and sale of batteries from each project, and should the incentives offered under the US IRA be reduced or canceled, so would the performance incentives under the agreement.”
See Also:
- Stellantis needs two more North American battery plants by 2030
- Volkswagen and Mercedes-Benz partner with Canada for raw materials vital to US battery manufacturing
- LG Energy Solution bets on US expansion to beat Chinese competitor CATL
- LG Energy Solution: EV battery market is booming as orders increase in US
- Stellantis offers buyouts to Hourly, Salaried workers, amid electric vehicle shift
Stellantis expects to resume the development of the new Ontario battery factory “as of now,” with plans to begin battery production as early as 2024.
The battery project is undoubtedly a significant development for the automaker as it can impress more investors, resulting in a potential increase in its stock price. Likewise, the investment will also positively impact Canada, creating numerous job opportunities and boosting its economy.
