Skip to content
BSL
  • Business News
  • Business Plan
  • Business Marketing
  • Small Business
  • Finance
Stellantis EV battery plant could cost Canada  billion in subsidies

Stellantis EV battery plant could cost Canada $19 billion in subsidies

Posted on June 2, 2023 By
Business News

Breadcrumb Trail Links

  1. News
  2. energy
  3. Electric Vehicles
  4. Commodities

The price tag may reach as much as $19 billion over a decade, far exceeding the $13 billion promised to Volkswagen

Author of the article:

Bloomberg News

Bloomberg News

Brian Platt and Gabrielle Coppola

Published May 31, 2023 • Last updated 2 days ago • 3 minute read

Prime Justin Trudeau speaks at a Stellantis facility in Windsor, Ont., last year.
Prime Justin Trudeau speaks at a Stellantis facility in Windsor, Ont., last year. Photo by Dan Janisse/Windsor Star

Article content

Stellantis NV is likely to receive more in subsidies for a new electric-vehicle battery plant in Canada than the $13 billion Volkswagen AG extracted for a similar project, according to an expert who has crunched the numbers.

Advertisements 2

This advertisement has not been loaded yet, but your article continues below.

Financial Post

THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLY

Subscribe now to read the latest news in your city and across Canada.

  • Exclusive articles by Kevin Carmichael, Victoria Wells, Jake Edmiston, Gabriel Friedman and others.
  • Daily content from the Financial Times, the world’s leading global business publication.
  • Unlimited online access to read articles from the Financial Post, National Post and 15 news sites across Canada with one account.
  • National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.
  • Daily puzzles, including the New York Times Crossword.

SUBSCRIBE TO UNLOCK MORE ARTICLES

Subscribe now to read the latest news in your city and across Canada.

  • Exclusive articles by Kevin Carmichael, Victoria Wells, Jake Edmiston, Gabriel Friedman and others.
  • Daily content from the Financial Times, the world’s leading global business publication.
  • Unlimited online access to read articles from the Financial Post, National Post and 15 news sites across Canada with one account.
  • National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.
  • Daily puzzles, including the New York Times Crossword.

REGISTER TO UNLOCK MORE ARTICLES

Create an account or sign in to continue with your reading experience.

  • Access articles from across Canada with one account.
  • Share your thoughts and join the conversation in the comments.
  • Enjoy additional articles per month.
  • Get email updates from your favorite authors.

Article content

Stellantis and South Korean partner of LG Energy Solution Ltd. announced the factory in Windsor, Ont., last year, but had halted construction while they negotiated more financial aid from Prime Minister Justin Trudeau’s government. The companies are seeking the equivalent of what they would receive under the Inflation Reduction Act if they are located at a plant in the United States.

FP Energy Banner

By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc. You may unsubscribe any time by clicking on the unsubscribe link at the bottom of our emails or any newsletter. Postmedia Network Inc. | 365 Bloor Street East, Toronto, Ontario, M4W 3L4 | 416-383-2300

Thanks for signing up!

A welcome email is on its way. If you don’t see it, please check your junk folder.

The next issue of FP Energy will soon be in your inbox.

We encountered an issue signing you up. Please try again

Article content

That means the price tag to Canada for the plant may reach as much as $19 billion over a decade, said Johns Hopkins University professor Bentley Allan — even larger than the package Canada signed to lure Volkswagen.

“That’s just what the math says,” Allan, a political scientist who has studied the Inflation Reduction Act and how the subsidies compare to Canadian policy, said in an interview. “If you take Stellantis’s public announcements, and you calculate it by the full value of the IRA for cells and modules, you get $19 billion.”

Article content

Advertisements 3

This advertisement has not been loaded yet, but your article continues below.

Article content

But there are factors that may allow Canada to bring the cost down, Allan said. For example, a recent budget measure by Trudeau’s finance minister to create investment tax credits will help offset equipment costs for the factory.

The reason plants are so expensive is that US legislation signed into law by President Joe Biden last summer offered to subsidize the production of battery cells, not just the capital costs of building and equipping a new plant.

US incentives

Although the Stellantis-LG facility would be smaller than the proposed Volkswagen plant at full capacity, the companies plan to start production next year — three years earlier than Volkswagen’s projected start date of 2027 for its facility in St. Thomas, Ont.

Advertisements 4

This advertisement has not been loaded yet, but your article continues below.

Article content

Depending on how quickly the German auto giant builds out its full plant, it may take years for Volkswagen to pass Stellantis in factory output, Allan said. The Inflation Reduction Act starts phasing out its battery plant subsidies in 2030, dropping them entirely by 2033, though future administrations could change that schedule.

The Volkswagen deal has received criticism from some economists in Canada, given the 10-year cost estimate. A majority of the population supports it, however, according to a recent poll by Nanos Research for Bloomberg News.

Prime Minister Justin Trudeau announcing Volkswagen will build a battery plant in St.  Thomas, Ont.
Prime Minister Justin Trudeau announcing Volkswagen will build a battery plant in St. Thomas, Ont. Photo by Tara Walton/The Canadian Press

It’s unclear how the Canadian public would view a second deal with an automaker that’s even more expensive.

The bulging price tag may explain why Trudeau’s cabinet has sparred with Ontario’s government over how much the latter is contributing to the Windsor project, which is expected to cost $5 billion.

Advertisements 5

This advertisement has not been loaded yet, but your article continues below.

Article content

Spokespeople for Industry Minister François-Philippe Champagne, Ontario Premier Doug Ford and Stellantis declined to comment for this story.

Canadian and Ontario government officials have repeatedly said they’re confident they will reach a deal to keep the plant in Windsor, despite warnings from Stellantis and LG that they’re considering alternate sites.

In April, the CEOs of the two companies sent a letter to Trudeau stating his government had committed in writing to match the IRA incentives but they were still waiting for a signature on a “special contribution agreement” finalized in February. “The continued delay in executing this agreement is a significant risk to the project,” they said.

Advertisements 6

This advertisement has not been loaded yet, but your article continues below.

Article content

But Stellantis also has an incentive to stick with Canada. Relocating the 45 gigawatt-hour factory, which is supposed to reach full capacity by 2025, could delay plans to catch up to rivals in the EV race and introduce more than 75 fully electric models by 2030.

When the plant was announced in 2022, the provincial and federal governments committed about $1 billion in public funding for capital costs, according to Ontario’s premiere and the Canadian Press.

Despite the cost to Canada’s treasury of competing with the US on battery plant subsidies, Trudeau and Champagne have publicly mused that the country could still secure one or two more electric-vehicle battery plants in the near future.

Bloomberg.com

Share this article in your social networks

Comments

Postmedia is committed to maintaining a lively but civil forum for discussion and encourages all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings.

Join the Conversation

Tags: business news articles business news usa

Post navigation

❮ Previous Post: Why Your Business Is At Risk Without A Succession Plan
Next Post: Adidas is selling Yeezy shoes again after cutting ties with Kanye West ❯

Recent Posts

  • The Benefits of Conducting Market Research
  • Exploring the Claims of CBD on Health
  • The Importance of Website Security in E-Commerce
  • How to Leverage User-Generated Content in E-commerce
  • Future Innovations in Mobile Technology

Tags

about accelerate alley automotive breaking business business news article business news stocks business plan software control cruise curiosity discovery edition estate fresh gears headlines ignite informed insights intellect jewellery knowledge latest learning market navigate navigating newest online passion revolution revving shift steering stories technology toward travel trends turbocharge updates wheels world business news

About Us

  • Contact Us
  • Disclosure Policy
  • Sitemap

Partner Links BackLink

Seedbacklink

Theme: Oceanly by ScriptsTown

WhatsApp us