Everyone wants to be the next big EV player… as long as someone else pays for it.
Driving the news: After stopping construction on their joint $5 billion EV battery plant in Windsor, Ontario, Stellantis and LG Energy have now threatened to relocate the factory if the government doesn’t pony up billions of dollars in incentives to compete with what’s on offer in the US.
Catch-up: The auto and battery makers were reportedly offered ~$1 billion in subsidies, split between Ottawa and Queen’s Park, in return for locating in Windsor. But that was before the US rolled out mega-incentives for anything related to EVs through the Inflation Reduction Act (IRA).
- Last month, the feds offered Volkswagenan an unprecedented subsidy package worth up to $13 billion to build a similar plant in St. Thomas, Ontario.
As you can imagine, Stellantis and LG Energy now feel they left money on the table. A letter from the companies, obtained by The Globe and Mail, claims that Ottawa had committed to matching US incentives (after the IRA passed) but hasn’t yet followed through.
- Canada’s Innovation Minister confirmed a Volkswagen-type deal is being discussed, but he wants Ontario to pay its “fair share,” which is where things start to fall apart.
- Queen’s Park says it hasn’t been part of negotiations and points to the US, where states are not being asked to pay up. It’s also unclear what’s meant by a “fair share.”
Why it matters: If their demands aren’t met, there’s a real chance that Stellantis and LG Energy walk from the deal, which would throw a wrench in the government’s grand ambitions to build a world-class supply chain for EVs. But hey, at least we still have Volkswagen.—SB