Stellantis Gets Pledge From Ontario to Pay a Third of Subsidies

Canada’s largest province has agreed to pay for a third of the subsidy package for a Stellantis NV electric-vehicle battery plant, but there’s still no deal in place to resume construction on the factory.

(Bloomberg) — Canada’s largest province has agreed to pay for a third of the subsidy package for a Stellantis NV electric-vehicle battery plant, but there’s still no deal in place to resume construction on the factory.

The carmaker has been locked in negotiations with Prime Minister Justin Trudeau’s government over subsidies for the 45 gigawatt-hour plant in Windsor, Ontario, across the border from Detroit. Last month, it halted work on the site pending a final agreement on public funding.

Ontario Premier Doug Ford confirmed his province would help pay for the subsidy in a news conference on Thursday. “We’re in for one third of the cost,” he told reporters.

That promise will come with a hefty price tag for the province, as the package for Stellantis is expected to exceed the C$13 billion ($9.7 billion) deal that Canada signed with Volkswagen AG this year for a similar plant nearby.

Earlier Thursday, the maker of Chrysler, Dodge and Jeep vehicles issued a statement denying a Toronto Star newspaper report saying a tentative deal had been reached. “Stellantis does not confirm what has been reported and to date has not received an official response from its previously sent letters,” a company spokesperson said by email.

Ford said he believes the federal and provincial governments are close to sealing the negotiations after “a bit of a roller coaster up and down.”

“We’re going to get this deal done,” he said. “I’m very confident we’re just inches away from making this happen.”

Stellantis and its South Korean partner LG Energy Solution Ltd. announced the $4.1-billion plant last year, months before the US passed the Inflation Reduction Act, which promises rich incentives for clean technology including EVs.

The US legislation forced the Trudeau government to put more money on the table to lure projects to Canada. It reopened negotiations with Stellantis and pledged C$13 billion over 10 years to Volkswagen AG for a similar facility.

While the Volkswagen project is larger, it is set to begin production later. Since the Inflation Reduction Act offers subsidies for production that are set to phase out in 2030 and end entirely in 2033, matching the incentives for the Stellantis plant could cost Canada even more — as much as C$19 billion, according to one expert.

Stellantis and LG have said in a letter to Trudeau that his government has promised to match the IRA subsidies five times in writing. The companies also said that an agreement was reached in February but they are still waiting for a signature.

As the negotiations spilled into the public arena last month, the companies halted construction of the plant and threatened to begin undertaking “contingency plans.”

Industry Minister Francois-Philippe Champagne’s office said Thursday talks are continuing. “We’re getting closer to the end of the negotiation,” the minister told reporters a day earlier.

(Updates throughout with Ontario subsidy pledge.)

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