Construction on the NextStar EV battery plant in Windsor has resumed after the federal and provincial governments reached a new deal with Stellantis and LG Energy Solutions.
The federal and Ontario governments say they’ve managed to finalize an agreement with Stellantis and LG Energy Solutions to resume construction on the NextStar electric vehicle (EV) battery plant in Windsor, Ont.
The new agreement will provide performance incentives to Stellantis and LG Energy Solutions of up to $15 billion over a 10-year term, with $5 billion coming from the province and $10 billion from the federal government.
“This is like a performance incentive or a tax break. It’s not a cheque per se,” Vic Fedeli, Ontario’s minister of economic development, job creation and trade, told CBC News.
Stellantis has confirmed the deal and that construction has resumed on the first large-scale EV battery plant in Canada, which is due to open mid 2024.
Stellantis halted most of the construction at the facility in May, claiming that Ottawa wasn’t honouring an agreement related to the project and that it would move to “contingency plans.”
The deal for the facility was upended by the passage of the United States Inflation Reduction Act, which includes production incentives for companies building electric vehicle batteries stateside.
Ottawa had agreed to contribute $500 million towards the plant but that deal was struck before the U.S. introduced its Inflation Reduction Act. Canada’s subsequent deal with Volkswagen to build its own EV battery plant in Windsor included subsidies worth up to $13 billion plus a $700-million grant.
Stellantis and LG wanted a similar deal and it seems that’s what they received.
The final agreement with Stellantis includes a number of conditions:
- The governments will only provide a performance incentive for batteries that Stellantis produces and sells, in line with the conditions in the agreement for the Volkswagen battery cell manufacturing plant;
- Stellantis will uphold its existing commitments in Canada and Ontario, including a production mandate at its plant in Brampton, Ontario;
- The company will invest more in Canada and Ontario, including for the establishment of a research and development facility in Windsor, Ontario;
- The operating expenses provided will only be available for as long as the U.S. Inflation Reduction Act incentives remain in effect;
- The federal government has agreed to provide Stellantis with a performance incentive on a per unit production basis of up to US$45 per kWh (US$35 per kWh for battery cells and US$10 per kWh for battery modules). Canada’s performance incentive is subject to an overall cap of C$15 billion, of which one-third is to be paid by the Ontario government.
Canada’s automotive sector supports over 500,000 workers, including nearly 100,000 auto plant workers in Ontario. The sector contributes $16 billion annually to Canada’s gross domestic product and is one of the country’s largest export industries.
