Feds, Stellantis reach deal over battery plant in Windsor

Stellantis and LG Energy Solution announced July 5 that their electric vehicle battery plant in Windsor, Ont., is back on track after reaching a “binding” financing deal with the governments of Canada and Ontario.

The two companies stopped construction on the plant earlier this year as more government money was sought to match what the United States would offer under its new Inflation Reduction Act.

The two companies said in a statement they will immediately resume building the plant, known as NextStar Energy.

“We are pleased that the federal government with the support of the provincial government came back and met their commitment of levelling the playing field with the IRA,” Mark Stewart, Stellantis's chief operating officer in North America, said in a statement.

Wednesday's deal essentially “mirrors” the benefits Stellantis and LG would have received under the IRA if their battery plant had been set up in the U.S., said Ontario Economic Development Minister Vic Fedeli.

“We've heard that Stellantis expects, if they were in the United States, over the course of time, they would receive $15 billion in tax breaks, so that would be expected in Canada,” Fedeli said in an interview.

[Read more: "Stellantis stops construction on EV battery plant over funding"]

He said the timeframe for that figure is roughly over 10 years, and it will be dependent on start dates and the level of production they achieve. Ontario has committed to fund one-third of the costs.

“It's quite a good deal for the workers in the industry,” said Fedeli.

The federal government called the deal “good for workers and good for Canada.”

“It will create and secure thousands of jobs – both in the auto sector and in related industries across Canada – and will further solidify Canada's place as a leader in the global electric vehicle supply chain,” Deputy Prime Minister Chrystia Freeland and Industry Minister Francois-Philippe Champagne said in a statement.

“The companies only assemble batteries, they don't make the components, so all these components need to be made here in Ontario now: cathode, anode, separator, copper foil, electrolytes, lithium hydroxide - each of those six major components will be a $1-billion-dollar-plus company coming to Ontario.”

The $5-billion plant was first announced in the spring of 2022, and Ottawa and Ontario were going to contribute $500 million each towards construction costs. It's expected to create 2,500 jobs.

Stellantis and LG Energy went back to the negotiating table months later when the U.S. IRA put billions of dollars in production tax credits on the table for battery makers south of the border.

In March, Canada reached a deal that will see Volkswagen get up to $13 billion in production subsidies for batteries they produce at a plant planned for St. Thomas, Ont., and Stellantis and LG Energy wanted a similar agreement to continue on with their plant in Windsor.

[Read more: "More money from Ontario needed to end 'stalemate' over Stellantis battery plant"]

“It's a good day not only for our joint venture but also for Canada,” Dong-Myung Kim, president of the Advanced Automotive Battery Division of LG Energy Solution, said in a statement. “We are happy to finally move forward with building the country's first major battery plant and be a central part of the local battery ecosystem.”

The companies said production is set to launch next year with an annual production capacity in excess of 45 gigawatt hours.

Stewart also thanked the efforts of Lana Payne and her team at Unifor, the massive union that helped keep the governments and Stellantis talking.

Payne told The Canadian Press she was “ecstatic” about the deal.

“This is great news,” she said. “Great news for the auto sector, but it is incredible news for our members who worked for Stellantis, who work in the supply chain, all across the southwest of Ontario.”

She said there was “no way” Unifor was going to lose the thousands of jobs that will come directly and indirectly from the plant.

“Unifor and the workers were not prepared to let anyone – not the company and not the governments – take away the jobs and the futures we were promised.”

Payne said Stellantis’s move to stop construction and talk of moving the plant elsewhere was not an idle threat. It wasn't just the Windsor plant that was at risk, but also Stellantis's plant in Brampton, Ont., too.

“There were thousands and thousands of jobs and workers' lives basically hanging in the balance here,” she said. “There was a serious risk here.”

Windsor Mayor Drew Dilkens said he was relieved.

“The last seven weeks has certainly been a rollercoaster ride for people in the community as we've waited for news on whether this deal could be secured,” he told The Canadian Press.

Dilkens called the Stellantis plant “monumental” for the region.

“If this did not happen, it would certainly have had a very negative impact on the future of our region,” Dilkens said.

This report by The Canadian Press was first published July 5, 2023.