Ontario Premier Doug Ford is playing the waiting game as construction of a portion of a $5-billion electric-vehicle battery plant in Windsor, Ont., remains at a standstill.
Stellantis 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.
In an effort to restart construction, Ford on May 19 said his government would offer more financial support, though he didn’t say how much.
Now, he says, the ball is in the federal government’s court.
“We’re waiting for the federal government to finish off a deal,” Ford said May 24 at an unrelated automotive announcement regarding free training in London. “As you know, we put in our fair share and now we’re stepping up again to put [in] more money because it’s all about the people. It’s all about making sure they have the jobs down in Windsor region and right across Southwestern Ontario.”
The office of the federal minister of innovation, science and industry would only say discussions are ongoing.
Stellantis said it had nothing new to say on the matter.
Financial terms between the federal government and the Stellantis-LGES joint-venture have not been disclosed, but Stellantis accused the federal government of not following through on 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 Windsor plant will make both cells and modules. Construction of the module department of the factory is currently on hold.
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.
The province put $500 million toward the project, Ford previously said. And, he added, Ontario is ensuring roads and energy for the plants.
He reiterated in London that the province is dedicated to expanding highways in order to support auto and battery production all across Southwestern Ontario.
“We’re going to make sure we put the infrastructure in to support this community, on top of Volkswagen in St. Thomas. That’s all part of the program,” Ford said. “We make sure we bring in the proper energy and the electricity that is needed. We’re going to make sure we have the infrastructure … and making sure we twin the roads.”
He said you can’t have a manufacturer “like Volkswagen, without the proper roads.”
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.
Without divulging how much the province is giving Stellantis, Ford defended Ontario's decision to offer more money, saying “it creates economic development.”