Stellantis has halted construction at its more-than C$5 billion (USD $3.7 billion) electric vehicle (EV) battery plant in Canada due to ongoing discussions with the federal government regarding support for the factory. A spokesperson stated that all construction related to battery module production on the Windsor site has ceased, although some construction associated with battery cell production is still ongoing.
Stellantis claims that the government has failed to deliver on the agreement reached last year. This development comes a month after Canada pledged up to C$13 billion in subsidies and a C$700 million grant to attract German automaker Volkswagen A.G. to establish its North American battery plant in the country.
Stellantis and South Korea’s LG Energy Solution (LGES) had previously announced their joint investment in the Canadian battery plant, with plans for an annual production capacity exceeding 45 gigawatt hours (GWh) and the creation of around 2,500 jobs in the Windsor area. The investment, which involved contributions from federal and provincial governments, was the largest in Canada’s automotive sector at the time.
The federal government is engaged in discussions with Stellantis’ management and believes that the issues can be resolved. Finance Minister Chrystia Freeland expressed confidence in reaching a deal but emphasized that the resources of the federal government are not unlimited. Freeland also called on the provincial government of Ontario to contribute its fair share.
“I am absolutely confident that we’re going to get a deal. But I also want to point out that the resources of the federal government are not infinite,” Freeland said.
In response, the Ontario provincial government stated that it has already signed an agreement with Stellantis and is not currently in negotiations. Ontario Premier Doug Ford expressed concern about the construction halt and urged the federal government to provide support similar to what was offered to Volkswagen.
“It really worries me,” Ford stated. “We need the federal government to step up as they did for Volkswagen.”
The Volkswagen battery gigafactory represents the largest single investment ever made in Canada’s electric-vehicle supply chain.