Canada Finalizes Incentive Deal for Stellantis EV Battery Plant

In a significant move to strengthen its position in the electric vehicle (EV) sector, Canada has finalized a deal with automaker Stellantis for the construction of an EV battery plant in Windsor, Ontario. The deal includes substantial incentives to support this major project.

The Windsor plant, a joint venture estimated at $3.8 billion (five billion Canadian dollars), is poised to be a key supplier of EV batteries for the North American market. Initially, Stellantis had put the project on hold in May, citing delays in receiving promised subsidies from Canada.

The Canadian and Ontario governments have now announced that they have reached an agreement with Stellantis, offering “performance incentives” that could amount to up to $11 billion (15 billion Canadian dollars). This initiative is part of a broader strategy to create and preserve jobs, including unionized positions, while establishing a comprehensive EV supply chain.

The agreement extends to a Volkswagen EV battery cell manufacturing plant in St. Thomas, Ontario, approximately 190km (118 miles) east of Windsor. Volkswagen is set to receive up to $9.7 billion (13 billion Canadian dollars) in incentives.

Canada, rich in essential minerals like lithium, nickel, and cobalt, has been actively working to attract investments in its EV sector. The country’s approach aligns with that of the United States, particularly in light of the US Inflation Reduction Act (IRA), which offers substantial subsidies for green industries.

The performance incentives announced are conditional on the production and sale of batteries from each project. They are subject to change based on the terms of incentives under the US IRA. If these US incentives are reduced or cancelled, the Canadian incentives may also be adjusted accordingly.

Stellantis has expressed readiness to resume construction at the Windsor site immediately, with battery production expected to start in 2024. Mark Stewart, Stellantis’s COO for North America, acknowledged the collective effort that made the agreement possible, signaling a positive step towards the development of the EV industry in Canada.

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