Ottawa Reaches Deal With Stellantis To End Battery Plant Feud

Canada’s federal government in Ottawa has agreed to increase the financial support it’s providing to an electric vehicle battery plant in southern Ontario, ending an impasse with automaker Stellantis (STLA) that began in May of this year.

Stellantis had halted construction on the battery plant that it is building in partnership with South Korea’s LG Energy Solution in Windsor, Ontario. The facility is expected to cost more than $5 billion to complete.

The automaker had accused politicians in Ottawa of bad faith bargaining and failing to honour their financial commitments when it announced production of the battery plant was being stopped.

To attract electric vehicle investments to Canada, the government of Prime Minister Justin Trudeau has pledged to match generous subsidies provided in the neighboring U.S., but negotiations with Stellantis over subsidies dragged on for months.

Ontario Premier Doug Ford recently promised that his provincial government would cover a third of the cost of the subsidies needed to construct the Windsor battery plant.

Exact figures have not been made public, but the subsidies given to Stellantis are expected to match or exceed the $13 billion over 10 years given to German automaker Volkswagen (VOW3) to build a battery plant in Ontario.

When the Windsor battery plant was announced in 2022, the federal and Ontario governments publicly committed about $1 billion to Stellantis.

Once completed, the battery factory is expected to create 2,500 jobs and supply Stellantis’ assembly plants throughout North America.

Stellantis’ stock has gained 52% over the last 12 months and currently trades at $17.55 U.S. per share.

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