Stellantis confirms it has in hand a new financial offer from the government of Canada designed to help pay for an electric-vehicle battery plant already under construction in Windsor, Ont.
“Stellantis and LGES are in receipt of a written offer that is currently under financial and legal review,” Stellantis Canada spokeswoman LouAnn Gosselin told Automotive News Canada. “We have nothing further to add at this time.”
The Toronto Star was first to report the news Tuesday. Sources familiar with the negotiations told the newspaper Federal Industry Minister François-Philippe Champagne delivered an enriched offer to Stellantis on June 2.
The delivery of the new offer came one day after Ontario Premier Doug Ford said his government would step up in a “massive, massive way” to help resolve the funding dispute over the NextStar Energy factory, a $5-billion joint venture between Stellantis and LG Energy Solution.
Ford has promised to use tax dollars to pay for one third of the cost of the offer, details of which are not known. However, one source familiar with the negotiations last week told Automotive News Canada, should the automaker and its partner accept the new deal, it could mean Ontario is on the hook for $5 billion.
The negotiations have been stuck between what Canada thinks is fair and affordable and what the company believes it is due. Stellantis has said it isn't getting what was promised by the federal government in a "special contribution agreement" in February.
When the plant was announced in March 2022, the federal and provincial governments each said they would contribute $500 million to the project. No other financial details were announced.
A statement by Stellantis at that time read only that “Each of the Municipal, Provincial and Federal levels of the Canadian government have agreed to fully support the successful operation of the joint venture company.”
Stellantis and LG Energy Solution late last year began pursuing more incentives to be directed toward the battery cells and modules — the cases that house the cells — that will eventually be produced there.
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The companies wanted more government support after the United States announced in August 2022 new production tax credits for EV battery makers as part of the Inflation Reduction Agreement (IRA). Under terms of the IRA, battery makers get a tax credit of US $35 per kilowatt hour from now until 2030, when they begin to be phased out. By 2033, they will be eliminated. They also receive a credit worth US $10 per kilowatt hour for the modules under the same timeline.
Stellantis turned up the heat and began threatening “contingency plans” for the Windsor plant once Volkswagen received up to C$13 billion in incentives to build its own EV battery plant in St. Thomas, Ont.
One source told Automotive News Canada that plan includes moving the module production to the United States from Windsor.
In a letter dated April 19, 2023, the heads of Stellantis and LG Energy Solution told 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 previous report in the Toronto Star newspaper.
The Stellantis plant is to have an annual production capacity of 45 gigawatt hours, which could make enough batteries for more than 400,000 vehicles a year, with the first production happening as early as 2024.
Volkswagen's plant, with twice the production capacity, could produce enough for nearly a million vehicles annually, with initial production starting in 2027.
The longer length of production, coupled with module output, could make the Stellantis deal bigger than the Volkswagen aid package.
