Skip to main content

The Stellantis sign is seen outside the Chrysler Technology Center, in Auburn Hills, Mich., Jan. 19, 2021.Carlos Osorio/The Associated Press

Hundreds of millions in government subsidies will help build Canada’s first large-scale electric-vehicle battery plant in Windsor, Ont., a $5-billion joint venture between global auto giant Stellantis NV STLA-N and South Korean battery maker LG Energy Solution.

The investment is the largest in Canada’s auto sector in history, federal Minister of Innovation, Science and Industry François-Philippe Champagne told an event in Windsor on Wednesday with company executives, Ontario Premier Doug Ford, and Windsor Mayor Drew Dilkens.

The massive injection of cash, which the companies and governments say will create 2,500 jobs, was committed after a concerted push by the federal and provincial politicians to attract electric-vehicle and battery manufacturing to Canada and Ontario amid a global race to win new investment as the industry transforms.

The Ontario Premier said the governments could not disclose the precise amount of government money going toward the new facility as it could affect negotiations under way with other companies on similar deals. But he said the government subsidies would be in the “hundreds of millions.”

In a news release, the federal government said the amount was “subject to commercial confidentiality” but that more information would be unveiled “once due diligence is completed.” In similar deals, the two governments have each pledged to cover up to 10 per cent to 20 per cent of this kind of new auto-sector investment.

“This game-changing battery plant will help guarantee that Ontario is at the forefront of the electric-vehicle revolution and ensure we remain a global leader in auto manufacturing,” Mr. Ford said.

Industry observers also have called the long-anticipated move transformational for Canada’s auto sector. However, major car makers have already announced even larger multibillion-dollar battery and EV facilities in the U.S. and elsewhere. Stellantis’s chief operating officer for North America, Mark Stewart, also said Wednesday that the company plans to build another new battery plant south of the border.

Stellantis, created by a merger last year of Fiat Chrysler Automobiles and France’s Peugeot SA, says its 4.5-million-square-foot Windsor plant is expected to be fully operational by 2025 and will provide batteries for electric cars made in factories across North America. But the company did not say precisely where it plans to build its new generation of electric vehicles, which it says will account for 50 per cent of its car and light-truck sales by 2030 in Canada and the United States. Ottawa’s target is to see 100 per cent zero-emission vehicle sales in Canada by 2035.

Both Queen’s Park and Ottawa have been working to woo car makers and battery companies as the industry looks to transform itself, with billions of dollars and thousands of jobs at stake for the country’s vital auto sector.

In an interview, Mr. Ford’s Economic Development Minister, Vic Fedeli, said he expects more auto-sector announcements in the coming weeks. He also said talks were under way with several other manufacturers and that he expects another battery plant announcement before the end of the year. Both he, Mr. Champagne and other officials have been meeting with Stellantis executives for months.

Mr. Fedeli said his government’s efforts to reduce taxes and costs for business, along with the province’s talent base and its green energy grid that draws largely on nuclear and hydro power, helped make the case.

He also defended his government’s decision to cancel its rebates for Ontario consumers who actually buy electric cars, which remain more expensive than comparable gas-burning vehicles. (The federal government and some other provinces, such as Quebec, still offer incentives.) Mr. Fedeli said Ontario has instead decided to spend its money securing manufacturing jobs.

“We are all-in, our chips are all-in, on the manufacturing side of this equation,” Mr. Fedeli said.

Canada’s auto industry is getting the massive investment despite the threat of a proposal from U.S. President Joe Biden, now stalled on Capitol Hill, which would offer incentives of up to US$12,500 to Americans who buy U.S.-made and union-made electric vehicles.

Mr. Ford and Mr. Fedeli were in Washington on Monday making their case against the idea. They also sought to reassure U.S. companies that the six-day protest blockade of Windsor’s key Ambassador Bridge to the U.S. last month would not happen again. Ontario introduced a bill on Monday that threatens stiff penalties for those who block borders.

Asked about both the blockade and the Biden measures on Wednesday, Mr. Stewart, the Stellantis COO for North America, noted that minivans built in Windsor have flowed across the border to U.S. customers for decades, and he expects no different with batteries.

“We have been long-standing partners for nearly 100 years,” he said.

Both Ontario and Ottawa routinely link their efforts to attract battery plants to longer-term hopes that most of the minerals used in Ontario-made batteries could be sourced in the province’s North.

“Canada is the only nation in the Western hemisphere with the capacity and the materials to transform cobalt, graphite, lithium and nickel into the next generation of batteries which will be needed to power electric cars,” Mr. Champagne told Wednesday’s event.

Prime Minister Justin Trudeau could not attend the Windsor event on Wednesday, as he was headed to a NATO summit in Brussels to discuss Russia’s invasion of Ukraine. He appeared on a video message, saying the deal showed Canada was prepared to lead the way on clean technology.

The new plant follows a series of similar announcements from governments and industry, including a $500-million General Motors Co.-affiliated plant to produce cathode active material, used in EV batteries, in Bécancour, Que. German giant BASF announced similar plans there.

Last week, Mr. Ford and Prime Minister Justin Trudeau announced $131.16-million from each government for Honda Motor Co. Ltd.’s plant in Alliston, Ont. In 2020, Ontario and the federal government put $295-million each toward a Ford Motor Co. of Canada Ltd. plan for a $1.8-billion global battery electric-vehicle production hub at its complex in Oakville, Ont.

Our Morning Update and Evening Update newsletters are written by Globe editors, giving you a concise summary of the day’s most important headlines. Sign up today.