Stellantis, LG Resume Construction of EV Battery Plant in Canada

Stellantis and LG Energy Solution announced on Wednesday that they have reached a binding financing agreement with the governments of Canada and Ontario, allowing them to resume construction of their electric vehicle battery plant in Windsor, Ontario.

The plant, known as NextStar Energy, had halted construction earlier this year as the companies sought additional government funding to match what the United States would offer under its new Inflation Reduction Act (IRA).

Mark Stewart, Stellantis’s chief operating officer in North America, expressed satisfaction with the deal, stating that it “mirrors” the benefits the companies would have received under the IRA if their battery plant had been set up in the U.S. Ontario Economic Development Minister Vic Fedeli confirmed this, adding that Stellantis expects to receive $15 billion in tax breaks over the course of 10 years, subject to start dates and production levels.

The federal government hailed the deal as beneficial for workers and Canada as a whole. Deputy Prime Minister Chrystia Freeland and Industry Minister Francois-Philippe Champagne said in a statement, “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.”

The $5-billion plant, first announced in the spring of 2022, is expected to create 2,500 jobs. Ottawa and Ontario had initially committed to contributing $500 million each towards construction costs. However, the introduction of the U.S. IRA, which offered billions of dollars in production tax credits for battery makers, led Stellantis and LG Energy to renegotiate the terms, reports The Canadian Press.

Dong-Myung Kim, president of the Advanced Automotive Battery Division of LG Energy Solution, expressed happiness at the progress, stating, “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 anticipate launching production next year with an annual production capacity exceeding 45 gigawatt hours.

Lana Payne, a representative of Unifor, the union that facilitated the negotiations, expressed her elation at the deal, emphasizing the importance of the jobs and futures promised to the workers. Windsor Mayor Drew Dilkens also expressed relief, calling the Stellantis plant “monumental” for the region.