Construction of Stellantis EV battery module plant remains at standstill

Stellantis has yet to resume construction of the battery module portion of its $5-billion electric-vehicle battery plant in Windsor, Ont., even though Premier Doug Ford has pledged an undisclosed amount of additional financial support for the project.

The automaker and its partner LG Energy Solution stopped construction of the NextStar Energy plant May 15, alleging the federal government wasn’t holding up its end of a deal potentially worth billions in incentives.

Financial terms between the two have never been disclosed, but Stellantis accused the federal government of not living up to promises to match incentives contained in the U.S. Inflation Reduction Act (IRA). The U.S. legislation includes an incentive of US $35 per kWh of cell production and a US $10 per kWh incentive for battery module production.

The automaker warned it is making contingency plans – a sign that it was willing to move the project across the border.

In a letter dated April 19, the heads of Stellantis and LG Energy Solution told Prime Minister Justin Trudeau the project was in jeopardy if he did not honour what the company says was a promise in writing to close the “competitive gap posed by the U.S. legislation,” according to a report in the Toronto Star newspaper.

The letter, signed by Stellantis CEO Carlos Tavares and LG Energy Solution CEO Young Soo Kwon, asked the prime minister to “urgently” sign off on an agreement reached at the end of February to match U.S. production subsidies for green energy and manufacturing projects offered by the Biden administration.

The federal government promptly shifted blame to the Ontario government, asking it to pay “their fare share,” without elaborating.

Ford said May 19 that his government would offer more support.

“I will confirm we're putting more money on the table,” he said after an unrelated announcement in St. Catharines, Ont.

“This is all about saving jobs and giving people the quality of life they deserve in southwestern Ontario.”

The premier wouldn't provide details on the additional amount of funding the province is prepared to provide.

A Stellantis spokesperson on May 23 said the company has “no new comment or statement at this time.”

“Construction remains stopped for the module building.”

The plant, expected to employ 2,500 people and slated to begin production next year, would be capable of producing 45 gigawatt-hours of lithium ion cells and modules annually to feed Stellantis plants in Canada and the United States.

Cells and modules are two separate parts, both to be assembled at the Windsor site.

Construction on the module portion of the plant was stopped, but work continued elsewhere on site.

Stellantis’ frustration increased after Canada signed a deal April 21 with Volkswagen for a battery gigafactory in St. Thomas, Ont. The federal government has committed to provide up to $13.2 billion in manufacturing tax credits to VW through 2032, while Europe's largest carmaker is investing up to $7 billion to build the plant. 

The incentives nearly match those in the Inflation Reduction Act.

Volkswagen will receive no federal support for battery modules made in St. Thomas., according to Hans Parmar, a spokesperson for Innovation, Science and Economic Development Canada.

Meanwhile, the province put up $500 million for both deals, Ford previously said, and is ensuring roads and energy for the plants.

With files from Automotive News Canada and the Canadian Press.