Stellantis pauses construction of its battery plant in Ontario
Investments by major manufacturers and governments in the energy transition are huge and transform the entire economic climate of a nation. We can see this with the recent announcements by manufacturers to set up assembly plants in Canada to help build electric vehicles. We remember that Volkswagen recently received the green light from the governments for a project in St. Thomas, Ontario.
However, unlike Volkswagen, which will only build cells for batteries there, the Stellantis plant, located in Windsor, will build cells and modules, which seems to cause problems. Indeed, we have just learned that the manufacturer is not satisfied with its agreement with the government in this regard.
Back to negotiations
In fact, Stellantis and its partner, LG Energy Solutions, announced on May 12 that they wanted to halt construction of the plant until the government respects its initial agreement. The manufacturer claims to have already set up intervention plans to stop everything. Such a decision could have a huge impact on the employment of many workers and on the region’s economy.
The details of the agreement are not clear because, when it was announced last March, Stellantis, LG Energy Solutions and the Minister of Innovation, François-Philippe Champagne, had not disclosed the sums that the different levels of government in this matter. All we know is that the project itself is estimated at $5 billion. Of this amount, LG would inject 1.48 billion.
According to Automotive News, Finance Minister Chrystia Freeland is having “good talks” with Stellantis; likewise, the federal government says it is concentrating on this issue in order to find a fair middle ground, both for the builder and for the taxpayers.
According to our sources, Stellantis, established in the Windsor area since the late 1920s, would be ready to close the module construction division altogether if it does not receive the help it deserves. In fact, what we understand is that Stellantis would like the financial assistance to be comparable to that recently received by Volkswagen. Remember that the project in St. Thomas represents an investment of $13.2 billion. Of this amount, Volkswagen would inject 7 billion.
As it aims to be operational in August 2024, the Stellantis plant will have a production capacity of 45 gigawatt hours of modules and cells intended for electric vehicles.
Conclusion
It is obvious that the energy transition that the whole industry is making can sometimes create tensions. There’s a lot of money on the table, and a lot of jobs are involved. Manufacturers and governments must therefore negotiate intelligently.
Certainly, when the government gives an amount of money to an automaker, we have to expect that others will also lend a hand. We can understand Stellantis, which has been working in this region of Ontario for nearly 100 years, for demanding that the federal government match Volkswagen’s offer. However, I am confident that because of the rich manufacturing history behind Stellantis and Ontario, each party will work together to bring some economic prosperity to the region.
