Ontario Premier Doug Ford said Friday that his government is prepared to commit more money to Stellantis NV STLA-N to keep the company’s electric-vehicle battery plant in the province, as Ottawa signalled that a deal with the auto maker is close.
The developments follow a week of heavy pressure from Stellantis, which is building the $5-billion plant in Windsor, Ont., with LG Energy Solution Ltd. The companies announced on Monday that they were halting construction on the project – a decision prompted by a funding dispute.
The Stellantis-LG plant was initially promised $1-billion in provincial and federal support. But that was before the United States began offering billions of dollars in incentives to battery-makers through its Inflation Reduction Act, and before Ottawa, in a bid to match the American subsidies, committed as much as $13-billion to a second battery plant, being built in St. Thomas, Ont., by Volkswagen VWAGY.
Stellantis and LG now want their Canadian subsidy increased accordingly. Ottawa, in turn, has said Ontario needs to pay its “fair share” of the cost of saving the Stellantis deal – without going into specifics. The Ontario government has said it previously committed $500-million in capital support to the Windsor plant, the same amount it committed to Volkswagen. Ottawa committed $700-million in capital support to Volkswagen, along with billions in credits tied to battery production.
“I will confirm we’re putting more money on the table there. This is all about saving jobs, and giving people the quality of life they deserve in Southwestern Ontario,” Mr. Ford said at a transit announcement in St. Catharines, Ont.
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The Premier said he wouldn’t provide more details until an official announcement is made. “This is going to be an opportunity [for] people to get great paying jobs, it’s going to bring certainty and stability within that region,” he said.
Earlier this week, Mr. Ford said he was disappointed in the way Ottawa has handled the situation. He said he wants to work with the federal government on auto-manufacturing deals, but that he was not involved in Ottawa’s talks with Stellantis and LG.
Stellantis has said the Windsor facility will employ about 2,500 people and lead to about 10,000 indirect jobs.
Industry Minister François-Philippe Champagne suggested Friday that a deal to keep the companies from moving their Windsor plant to the U.S. is in the works.
Mr. Champagne said he had a two-hour dinner with LG chief executive William Cho in South Korea during a state visit earlier this week, at which they reached a “common understanding.” Mr. Cho, he said, followed up with him by e-mail on Friday morning about “the track to follow.”
“I remain very confident that we will come to an agreement with the company,” Mr. Champagne said at the Canadian embassy in Washington, where he was drumming up business for Canada’s semiconductor industry. “I think we have a common understanding about the way forward.”
He said Mr. Ford’s willingness to step up Ontario’s contribution is a sign that “we’re making progress.” He described the Premier’s comments as “reassuring.”
Mr. Champagne did not say how much the federal and provincial governments will have to increase Stellantis and LG’s subsidies to get them to continue with their project.
The minister tried to play down the dramatic standoff.
“What you’ve seen in the last few days, I would say, is just normal negotiating. I wish that Canadians would not be too concerned over that,” he said. “We’re going to get to an agreement.”
He reiterated that Ottawa is willing to spend the money necessary to match the large clean-energy subsidies now being handed out by the U.S., in order to ensure Canada does not lose out on future electric-car plants.
“We have always said we would level the playing field with the United States, with the type of IRA incentives,” he said.
Stellantis spokesperson LouAnn Gosselin declined to comment on Friday.
Almost immediately after the Inflation Reduction Act passed in August, 2022, Stellantis and LG began to seek assurances from Ottawa that the Windsor plant would not be on an “uncompetitive footing” with the U.S., according to a letter sent last month from the companies’ chief executives to Prime Minister Justin Trudeau and obtained by The Globe and Mail.
The letter says Ottawa provided five written documents confirming commitments to match production incentives under the IRA, but has failed to follow through, and it warns that the companies will be forced to make “difficult decisions” about the project and other investments if those commitments aren’t met.
The exact cost to taxpayers of matching the IRA is not possible to predict, because the U.S. subsidies – provided through production tax credits – are tied to how many battery cells and modules are produced by plants between now and 2032.
The Stellantis-LG plant, which would have lower capacity than Volkswagen’s, but would begin operations sooner, would likely get a subsidy in the same range as what was promised to Volkswagen.
Laura Stone
Adrian Morrow