Canada agrees up to C$15 billion in incentives for Stellantis-LGES battery plant

By Ismail Shakil

OTTAWA (Reuters) -Canada will provide up to C$15 billion ($11.23 billion) in production incentives for a Stellantis-LG Energy Solution (LGES) electric vehicle battery plant, the federal and Ontario governments said on Thursday, a day after the companies said construction at their plant would resume.

The production incentives agreed with Stellantis and LGES trump a similar deal with Volkswagen (ETR:) announced in April, as Ottawa competes with Washington to woo major clean-tech projects.

The subsidies deal resulted in construction resuming at the Stellantis-LGES plant in Windsor, Ontario, after the companies halted the project in May and demanded Canada match support available in the U.S. under the Inflation Reduction Act (IRA).

“Today’s announcement will protect and create thousands of good-paying jobs for workers, including unionized jobs, as we establish an end-to-end electric vehicle supply chain to strengthen the clean economy,” the federal and provincial governments said in a joint statement.

Canada has said projects like the Stellantis-LGES and Volkswagen battery plants would be “anchors” for a pivot to clean tech. The country – home to a large mining sector for minerals including lithium, nickel and cobalt – is trying to lure companies involved in all levels of the EV supply chain as the world seeks to cut carbon emissions.

When the Volkswagen deal was announced, the federal government hailed it as the biggest single investment ever in Canada’s EV supply chain, but the new terms for Stellantis-LGES mean it will likely end up being even bigger.

Funding for the battery plant will be provided by Canada’s federal government and the province of Ontario in a pact structured similarly to a C$13 billion deal for Volkswagen’s plant.

For the two deals, the federal government will provide two-thirds of the funding while the Ontario government will provide one-third, “as a direct response to incentives offered by the U.S. government,” according to the statement.

Deputy Prime Minister Chrystia Freeland thanked Ontario Premier Doug Ford for the province’s contribution and said the IRA had “changed the rules” of the game.

“This the year it’s going to be decided which countries have the investments and the great paying jobs that are going to build the green economy,” Freeland told a news conference in Vancouver.

“Our government is absolutely determined that Canada gets its fair share of those green jobs.”

Production at the plant in Ontario, across the river from Detroit, where Stellantis has U.S. operations, is set to begin in 2024, creating some 2,500 new jobs and targeting an annual production capacity of over 45 gigawatt hours.

The performance incentives are contingent on, and proportionate to, the production and sale of batteries from each project, and could be canceled or reduced if the incentives offered under the U.S. IRA are reduced or canceled, the government said.

($1 = 1.3361 Canadian dollars)