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Stellantis stops construction on EV battery plant over federal funding

The automaker says the federal government has not held its promise to provide funding for the $5 billion plant in Windsor.
5/16/2023
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One of the world's largest automakers said Monday it has stopped construction on a $5-billion electric vehicle battery plant in Windsor, Ont., saying the federal government has not delivered on what was promised.

The news prompted the premier of Ontario to implore Ottawa to get the deal done.

Stellantis, which makes Chrysler, Ram and Fiat cars among others, and South Korean battery-maker LG Energy Solution announced the plant last year and said it was expected to create 2,500 jobs.

All levels of government were to provide financial support. While the amounts were not disclosed at the time, Stellantis now says the federal government has not held up its end of the bargain.

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"As of today, the Canadian government has not delivered on what was agreed to therefore Stellantis and LG Energy Solution will begin implementing their contingency plans,'' the company said in a statement.

"Effective immediately, all construction related to the battery module production on the Windsor site has stopped.''

The federal government says negotiations are ongoing. The issue came up at question period in the House of Commons on Monday.

"We're going to fight for the best deal for Canada,'' Deputy Prime Minister Chrystia Freeland said.

Outside the house, Freeland said she was confident they'd get a deal.

"But I also want to point out that the resources of the federal government are not infinite and we are counting on Ontario to do its fair share and we're counting on Stellantis to be reasonable,'' she said.

Ontario Premier Doug Ford said the federal government needs to support Stellantis in the same way it did Volkswagen. A recently announced deal with that company to build an electric vehicle battery plant in St. Thomas, Ont., includes subsidies worth up to $13 billion plus a $700 million grant.

"It really worries me,'' Ford said after an unrelated announcement in Mississauga, Ont. "We need the federal government to come to the table and show their support like they have all along.''

The province put up $500 million for both deals, Ford said, and is ensuring roads and energy for the plant.

"We'll go toe to toe with any state down in the United States,'' he said. "The only thing we can't do is go toe to toe with the U.S. federal government. That's the federal Canadian government's job, and they can do it. We're confident that they made a promise to the people of Windsor – I was down there with the prime minister – now they need to keep their promise to the people in Windsor.''

The federal subsidies to Volkswagen were intended to allow Canada to compete with the United States, where the Inflation Reduction Act added production subsidies for batteries.

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On the provincial side, Ontario Economic Development Minister Vic Fedeli said matching what the U.S. can offer is "out of our league.''

"We're involved in the capital dollars for Stellantis, so have the feds, by the way, as we've been partners, almost 50-50 partners all the way down the line,'' he said.

``But on the operating expense, this IRA that the federal government and the States have, this is up to the federal government to match. They have made commitments to Volkswagen, they have made commitments to Stellantis and we expect them to honour those commitments.''

The Canadian Taxpayers' Federation said the government should reject Stellantis' demands.

"If you hand out billions of dollars in taxpayer cash to one auto company, of course the others will follow,'' CTF Ontario director Jay Goldberg said in a statement.

"Taxpayers can't afford to throw money at every company under the sun and Ottawa needs to say no before it wastes billions more.''

Ford's pleas to the federal government follow similar ones from the mayor of Windsor and Unifor, Canada's largest private-sector union, over the weekend.

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