Stellantis has abruptly ceased construction on certain segments of its planned electric vehicle (EV) battery factory in Windsor, Ontario, Canada. The automotive manufacturer announced on Monday that the halt comes in response to a conflict with the Canadian federal government over financial assistance.
The automotive giant accuses Ottawa of failing to deliver on a previously agreed financial aid package, reports Automotive News.
“Stellantis and LG Energy Solution will begin implementing their contingency plans. Effective immediately, all construction related to the battery module production on the Windsor site has stopped,” the company announced in a statement.
The $5 billion factory, set to start operations in August 2024, was expected to produce 45 gigawatt-hours (gWh) of lithium-ion cells and modules annually. These would serve Stellantis’s assembly operations in Canada and the United States. While construction on the cells section of the facility is in its initial phase, framing of the module segment of the factory is partially complete.
The halt in construction has stirred controversy, especially since the plant’s announcement in March 2022. At that time, Canada’s Innovation Minister Francois-Philippe Champagne described the deal as the largest ever in the Canadian auto sector. The deal involved about $1.48 billion from LGES and undisclosed contributions from federal and provincial governments.
The spokesperson for Minister Champagne stated on May 12, “We continue to negotiate in good faith with our partners. Our top priority is and remains getting the best deal for Canadians.”
Meanwhile, Stellantis is reported to be demanding a deal similar to the $13 billion incentives received by Volkswagen for a battery gigafactory in St. Thomas, Ontario. This demand comes amid concerns that the U.S. Inflation Reduction Act puts Canadian battery production at a significant disadvantage, according to Brian Kingston, head of the Canadian Vehicle Manufacturers’ Association.
As the dispute continues, parties such as Windsor Mayor Drew Dilkens and Unifor, the union representing Detroit Three hourly workers in Canada, have urged for a resolution.
Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, remains optimistic about the investment proceeding. He described the situation as “a tough negotiation gone public,” but expects to see the issue resolved.
Ontario’s Premier Doug Ford expressed his apprehension regarding the Stellantis project on Monday. He revealed that his administration had already agreed to a $500 million financial aid package for Stellantis. Ford shared that an identical sum had been offered to Volkswagen AG for its recently declared EV battery plant situated in St. Thomas, Ontario.
Ford called on the federal government to finalize its financial aid terms with Stellantis, encouraging it to take action similar to its deal with the Volkswagen plant. The latter arrangement includes federal subsidies of up to $13 billion in addition to a $700 million grant.
Ford emphasized the need for federal government support, stating, “We need the federal government to come to the table and show their support like they have all along.” He added that both he and Mayor Dilkens harbor considerable concerns about the issue.
