Canada has increased planned Stellantis battery factory support

OTTAWA — Canada has increased its planned support to carmaker Stellantis to build a battery plant in Windsor, Ontario, the industry minister said on Tuesday, but it wants the Ontario provincial government to help pay for it.

To break the “stalemate,” it is important that Ontario “pay its fair share,” Industry Minister Francois-Philippe Champagne told reporters at a news conference in Seoul.

Stellantis on Monday stopped construction at a C$5 billion ($3.7 billion U.S.) electric-vehicle battery plant in Canada, which is being built in partnership with South Korea’s LG Energy Solution (LGES).

Canada has not delivered what it already promised and there are no new talks under way, Stellantis spokesperson LouAnn Gosselin said.

Stellantis and LGES announced their battery plant investment in March last year, but tensions emerged when the United States in August passed the Inflation Reduction Act (IRA), a massive package of clean-tech incentives for companies, Champagne said.

“The company asked us to come back to the table,” Champagne said. “In the spirit of fairness … we said we would level the playing field with the United States, that we would offer them a fair deal quite similar to what we have offered to Volkswagen.”

Stellantis confirmed that an increase in support was negotiated after the IRA was adopted, and it is that deal that Canada has yet to deliver on, Gosselin said.

In April, Canada agreed to provide up to C$13 billion in manufacturing tax credits and a C$700 million grant to lure German automaker Volkswagen AG to build its North American battery plant in the country. It was the biggest single investment ever in Canada’s electric-vehicle supply chain.

Ontario’s provincial government pledged C$500 million in direct investment to the German carmaker, the same amount it offered to Stellantis last year.

Canada is offering Stellantis manufacturing tax credits now, Champagne said, adding, “there’s going to be a lot of economic benefits to the people in Ontario, and that’s why we think it’s only fair … that the province will pay their fair share.”

Ontario Premier Doug Ford, speaking on Monday, said the federal government must put up the new funds, not the province. His office declined to comment on Tuesday.

Champagne said he would likely meet LGES management at an official dinner during his visit to South Korea this week, and added that he was “confident” the issue would be resolved. Prime Minister Justin Trudeau is also making an official visit to South Korea this week before heading to the G7 in Japan.