Stellantis Halts Battery Plant Construction in Canada

Stellantis Halts Battery Plant Construction in Canada
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Automaker Stellantis has decided to cease construction activities at its electric vehicle Battery Plant in Windsor, Canada, valued at over C$5 billion ($3.74 billion U.S.). This action comes as a result of a disagreement between the company and the federal government over subsidies.

According to a spokesperson for Stellantis, all construction related to battery module production on the Windsor site has been abruptly halted, effective immediately.

Following the recent development, there has been no immediate response from a spokesperson representing Canada’s Innovation Minister Francois-Philippe Champagne when requested for comment.

This decision comes shortly after automaker Stellantis and South Korea’s LG Energy Solution Ltd (LGES) revealed their intentions to execute “contingency plans” concerning the aforementioned plant. Stellantis conveyed in a concise statement via email that due to the Canadian government’s failure to fulfill the agreed-upon terms, both Stellantis and LG Energy Solution will promptly commence the implementation of their alternative strategies, without providing further details.

Stellantis Halts Battery Plant Construction in Canada

Last year, LG Energy Solution (LGES) and Stellantis jointly announced their investment plans to establish a significant domestic electric vehicle battery manufacturing facility in Canada. This landmark deal, which involved approximately $1.48 billion from LGES along with undisclosed contributions from federal and provincial governments, was hailed by Canada’s Innovation Minister, Francois-Philippe Champagne, as the largest ever in the country’s automotive sector.

In response to the recent developments, a spokesperson for Champagne emphasized the vital role of the automotive industry in the Canadian economy and for the hundreds of thousands of Canadian workers, highlighting ongoing negotiations in good faith with their partners. The spokesperson further emphasized that securing the best possible agreement for Canadians remains the top priority in these discussions.

In a previous statement, Finance Minister Chrystia Freeland acknowledged the ongoing constructive dialogues between Canada and Stellantis, following a newspaper report suggesting that the automaker sought more favorable government subsidies than those initially provided by Ottawa. Freeland assured reporters that the federal government team is diligently and attentively engaged with Stellantis, underscoring the significance placed on these discussions. These remarks were made during a media call subsequent to meetings with G7 partners in Japan.

According to unnamed sources cited by the Toronto Star newspaper, Stellantis aims to negotiate an arrangement akin to the level of incentives granted to Volkswagen earlier this year.