International car manufacturer Stellantis and South Korean battery company LG Energy Solution have resumed construction at their joint-venture electric vehicle (EV) battery plant in Canada after receiving an expanded package of subsidies from the Canadian Government.
The federal government and the state of Ontario agreed to increase the subsidies that the two companies would receive for the C$5bn (US$3.7bn) plant.
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Stellantis and LG announced the plant in March 2022, with completion set for 2024, creating 2,500 new jobs in the process. Once operational, the plant will have a productive capacity of 45 gigawatt-hours per year.
However, production stalled after the introduction of the US Inflation Reduction Act (IRA), with the two companies seeking to benefit from similar subsidies. Construction was halted at the plant in May as they sought to lobby the government for subsidies competitive with the IRA. Neither company has revealed what the updated subsidies amounted to.
“The IRA fundamentally changed the landscape for battery production in North America, making it challenging to produce competitively priced, state-of-the-art batteries in Canada without an equivalent level of support from government,” said Mark Stewart, Stellantis North America CEO.
Stewart continued: “We are pleased that the federal government with the support of the provincial government came back and met their commitment of levelling the playing field with the IRA. This collective effort enabled the deal to close and we are now resuming construction on the site in Windsor.”
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By GlobalDataIn June it was revealed that Canadian subsidies for a similar battery plant constructed by Volkswagen, also in Ontario, would cost the taxpayer C$2.4bn more than initially announced. Volkswagen were initially set to receive C$13.2bn in tax credits for the plant’s construction, as well as a federal government grant for C$700m. This number rose, however, also thanks to the IRA’s competitiveness, which changed the subsidies’ “tax treatment”, reported Reuters.
