Stellantis halts battery plant construction over dispute with Canadian govt

A Stellantis assembly worker works on the interior of a Chrysler Pacifica at the Windsor Assembly Plant in Windsor, Ontario, Canada. January 17, 2023. REUTERS/Rebecca Cook

By Ismail Shakil

OTTAWA (Reuters) – Automaker Stellantis has stopped all construction at a more-than C$5 billion ($3.74 billion) electric vehicle battery manufacturing plant in Windsor, Canada, over a disagreement with the federal government about subsidies, a spokesperson for the company said on Monday.

Canadian Prime Minister Justin Trudeau addresses the media during a tour of the Stellantis Windsor Assembly Plant in Windsor, Ontario, Canada. January 17, 2023. REUTERS/Rebecca Cook

“Effective immediately, all construction related to the battery module production on the Windsor site has stopped,” the spokesperson said.

Canada’s industry ministry did not immediately respond to a request for comment.

The move comes a month after Canada agreed to provide up to C$13 billion in subsidies and a C$700 million grant to lure German automaker Volkswagen AG to build its North American battery plant in the country.

“It really worries me. We need the federal government to step up as they did for Volkswagen,” Ontario Premier Doug Ford told reporters when asked about the construction halt.

But a Canadian federal government source familiar with the talks said the province of Ontario needed to offer more attractive terms to the automaker.

“The negotiations are ongoing,” the source said. “We want Stellantis to stay…. We’ve always said this is an important deal for us.”

Canada’s deal with Volkswagen for a battery gigafactory, announced earlier this year, is the biggest single investment ever in the country’s electric-vehicle supply chain.

LGES and Stellantis had announced their battery plant investment in the country last year, aiming for an annual production capacity in excess of 45 gigawatt hours (GWh) and expected to create an estimated 2,500 new jobs in the Windsor area.

A spokesperson for Champagne, who described the deal as Stellantis’s largest ever in the Canadian auto sector when it was announced, on Friday, said the “auto industry is crucial to the Canadian economy and to the hundreds of thousands of Canadian workers”.

($1 = 1.3372 Canadian dollars)

(Reporting by Ismail Shakil and Steve Scherer in Ottawa and Nathan Gomes in Bengaluru; Editing by Pooja Desai)

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