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May 16, 2023
LG, Stellantis project hangs in balance as Canada politicians fight over money
If Canada wants this plant, they’re going to have to pony up: Auto expert on Stellantis stalemate
Canada’s industry minister says the Ontario government hasn’t committed to paying its “fair share” to help advance negotiations with automaker Stellantis NV over an electric-vehicle battery plant.
François-Philippe Champagne said the Canadian government will be competitive with the U.S. when it comes to the auto sector. “What we now need is for Ontario to pay its fair share. Full stop. Windsor is a key place to build our EV ecosystem,” the minister said Monday night on Twitter, referring to the southern Ontario city where the plant would be located.
Stellantis and LG Energy Solution Ltd. announced the project last year, but said Monday they’ve halted construction as they wage a battle for more public money from Canada. Prime Minister Justin Trudeau’s government has already offered up to $13 billion to Volkswagen AG to lure a vehicle battery plant to Ontario, Canada’s most populous province and the heart of its auto industry.
Champagne sent the tweet on his way to South Korea, LG’s home country, where he’s on a trade trip with Trudeau. A spokesperson for Ontario Economic Development Minister Vic Fedeli didn’t immediately respond to a request for comment.
Speaking to reporters in Seoul on Tuesday, Champagne said he was looking to Ontario to share in paying for public subsidies for the plant, beyond the typical capital expenditure funding.
“The capital expenditure is the easy part of the equation, which we have always done and we have done with our partners all along,” he said. “What we’re saying now when we say ‘pay their fair share’ is to make sure that they would be with us in terms of production support.”
Stellantis and LG Energy pledged in 2022 to invest more than $4 billion in the Windsor battery facility. Meanwhile, Ontario and Canada promised about C$1 billion to help Stellantis retool two Ontario plants to build electric vehicles.
However, both announcements came months before U.S. President Joe Biden signed the Inflation Reduction Act, which contains rich incentives for EV manufacturing. Trudeau subsequently promised more government assistance to help Canadian manufacturers compete.
Champagne said Tuesday that Stellantis asked his government to come back to the table after the passage of the act. He said negotiations are focused on the battery cell manufacturing plant and his government has promised a “fair deal” in line with what it offered to Volkswagen.
He also said he plans to pull aside and talk to the CEO of LG, Kwon Young-soo, at a state dinner on Wednesday.
Asked whether he thought Stellantis was bluffing when it halted construction and threatened to build the plant elsewhere, the minister said he is “old enough” to know when companies are using negotiation tactics.
“There’s a negotiation, that’s fair. But my job and our job is to fight for Canadians,” he said. “So I’m fighting. We got a good deal with Volkswagen, we’re going to get a good deal with LG-Stellantis and we’re going to get a deal that we can afford as Canadians.”
Ontario Premier Doug Ford earlier told the Canadian Press that the federal government needs to support Stellantis in the same manner as Volkswagen. He also said his province cannot afford to provide subsidies in line with the US government. “It really worries me,” he said. “We need the federal government to come to the table and show their support like they have all along.”
If built, the 45 gigawatt-hour factory would create 2,500 jobs and supply Stellantis’s assembly plant in Windsor and others across North America.
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