Stellantis and LG Energy have something surprising up their sleeves for their EV battery plant in Canada

Stellantis and LG Energy Solution’s $4 Billion Investment in Canada Facing Uncertainty

Stellantis and South Korea’s LG Energy Solution have postponed the investment in a more-than-$4-billion battery plant in Canada due to the federal government not keeping up on agreed promises, according to a spokesperson for Stellantis. The spokesperson stated that “as of today, the Canadian government has not delivered on what was agreed to, therefore Stellantis and LG Energy Solution will immediately begin implementing their contingency plans.” The investment was in establishing a domestic and large-scale EV battery factory in Canada, announced last year.

The Promise

The deal was deemed the largest ever in the Canadian auto sector. This deal consisted of about C$1.48 billion ($1.1 billion) from LG Energy and undisclosed contributions from federal and provincial governments. The Canadian Innovation Minister Francois-Philippe Champagne had commented that the auto industry is vital to the Canadian economy and hundreds of thousands of Canadian workers.

The Delay

The Finance Minister Chrystia Freeland stated that the conversations were good between Stellantis and the Canadian government after a newspaper reported on the automaker’s search for better government subsidies than what was initially offered by Ottawa.

The Potentially Sweeter Deal

The automaker, Stellantis, has threatened to pull out from the battery plant deal unless the government’s proposal is sweetened to what Volkswagen received this year. Stellantis is seeking to secure an enriched settlement in Canada, and The Toronto Star newspaper reported that Stellantis began searching for an enriched deal in Canada shortly after the US Inflation Reduction Act, which offers $369 billion in subsidies for electric vehicles and other clean technologies, passed into law last year.

Canada’s Deal with Volkswagen

The current deal that Canada has made with Volkswagen for the creation of a gigafactory is the most considerable single investment ever made in the country’s electric-vehicle supply chain. The federal government has committed to providing up to C$13.2 billion in manufacturing tax credits through 2032, while Europe’s largest carmaker will invest up to C$7 billion to develop the plant in St. Thomas, Ontario.

Canada’s Goal

Canada is hoping to attract firms involved in all stages of the EV supply chain to its multi-billion-dollar green technology fund as the world seeks to reduce carbon emissions. Canada is home to a large mining sector responsible for minerals like lithium, nickel, and cobalt.

Total Job Loss

Windsor Mayor Drew Dilkens and Unifor, the union that represents Detroit 3 hourly employees in Canada, have issued different statements, urging the two parties to settle their dispute. Unifor National President Lana Payne said: “Government and Stellantis are playing a high-stakes game that is betting the livelihoods of tens of thousands of Canadian autoworkers.” The deal that was beneficial to Canada’s economy is in question due to the government not keeping its commitments, jeopardizing the EV plant’s completion and additional investment coming to the region.

President’s Perspective

President of the Automotive Parts Manufacturers’ Association, Flavio Volpe, however, is optimistic that the investment will go ahead. Volpe tweeted: “Fortunately, both parties are very committed to the city, the supply chain, and its workers. I expect that we will see this through.” He adds, “What has been exposed is a tough negotiation gone public. When Canada landed this incredible investment, the USA countered with the most significant subsidy offer in automotive history. Stellantis is addressing its fiduciary responsibility to its shareholders, as it should.”

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