Stellantis announced this week that it will resume construction at NextStar Engery, its first large scale battery plant for electric vehicles in Canada, after reaching an agreement with the Canadian federal and the Ontario provincial governments. In all, they have promised $15 billion CAD ($11.2 billion USD at current exchange rates) in incentives for the plant.
The automaker first announced the plant in March 2022, but stopped construction on May 15, 2023, saying the governments had not lived up to their financial promises, despite investing $500 million CAD ($374 million USD) in the plant.
Now that the federal government has promised the company $10 billion CAD ($7.48 billion USD) in tax incentives, and the provincial government the remaining $5 billion CAD ($3.74 billion), Stellantis is happy to resume construction.
Read: Stellantis Threatens To Scrap $3.7B Canadian Battery Plant After Dispute With Government
“The [Inflation Reduction Act] fundamentally changed the landscape for battery production in North America, making it challenging to produce competitively priced, state-of-the-art batteries in Canada without an equivalent level of support from government,” said Mark Stewart, COO of Stellantis for North America. “We are pleased that the Federal government with the support of the Provincial government came back and met their commitment of leveling the playing field with the IRA.”
The tax breaks provided by the Ontario government are based on production over a 10-year term, Victor Fedeli, the province’s minister of economic development, job creation, and trade, told the CBC. He described the money as a “performance incentive” and “not a check per se.”
Negotiations for this new deal were aided by Unifor, the union that represents Canada’s autoworkers. It is celebrating the agreement, which its president, Lana Payne, says is a win for workers.
“I am incredibly proud of the work our union did defending these auto jobs and standing up for the bright EV future our members were promised,” said Payne. “We look forward to having this battery plant built in Windsor and to seeing the commitments made to our members in Windsor and Brampton materialized.”
NextStar Energy is being established as a joint venture between Stellantis and LG Energy Solutions. Despite the delay, the automaker says it still expects the plant to open in 2024, and it will have an annual production capacity of more than 45 gigawatt hours.
