Global Courant 2023-05-20 02:03:43
Ontario is offering more money to deter automaker Stellantis from pulling out of construction of an electric vehicle battery plant in Windsor, Ontario, Prime Minister Doug Ford said Friday.
Stellantis and LG Energy Solution announced last year they were building the $5 billion plant, but in recent days halted construction and warned they were enacting contingency plans as the federal government signed an agreement to reduce the subsidies offered. the United States.
Following Ford’s comments, federal industry minister François-Philippe Champagne said “we are making progress” in closing the deal and getting it back on track.
Champagne said that while visiting Seoul this week, he had a two-hour dinner with LG Energy Solutions president Kwon Young Soo and said it was a productive meeting. Champagne said Kwon wrote him back Friday morning.
“I think we agree on the way forward,” Champagne said from Washington, D.C., where he attended meetings.
Under the original Stellantis and LG deal, signed in March 2022, Ontario and Canada would each have contributed $500 million to the capital cost of the new battery plant.
But the companies moved back to Canada in August after the United States signed the Inflation Reduction Act into law, which offers companies manufacturing tax credits of up to $35 per kilowatt-hour in every battery produced.
Carlos Tavares, CEO of Kwon and Stellantis, wrote to Prime Minister Justin Trudeau last month, saying that Ottawa had confirmed in writing five times that it would match production incentives under the United States’ Inflation Reduction Act, but has failed to honor those commitments.
A “special contribution deal” was reached in February, but the federal government has pressured Ontario to raise more money as well, saying the province must also pay its “fair share.”
Champagne didn’t falter when asked if Ontario’s bid is now what Canada would consider the “fair portion” of the province.
Ford said earlier this week that he was disappointed with how the federal government has handled the issue, as the county has failed to make those commitments for production subsidies, but said he was working with officials in Ottawa.
“I will confirm that we are putting more money on the table,” he said after an unrelated announcement in St. Catharines, Ont.
“This is all about saving jobs and bringing quality of life to people in Southwestern Ontario.”
The Stellantis battery plant would supply its car factories in North America and employ about 2,500 people. Auto parts manufacturers expect the plant to create about 10,000 indirect jobs.
Stellantis and LG sent the letter to Trudeau around the same time the terms of the Volkswagen deal were made public, but Champagne said Friday there was no correlation. He said the Stellantis and Volkswagen deals were being negotiated in parallel.
Ontario also pledged $500 million in capital as part of the latest deal, but Canada’s offer included $700 million in capital and between $8 billion and $13 billion in production subsidies over a decade to match the IRA. There is a provision that reduces or eliminates those subsidies if the IRA is modified or canceled.
Ontario did not contribute to production subsidies for Volkswagen, but Canada is seeking the province to do so for Stellantis. Champagne dodged a question about why that is, but said Ontario will benefit the most from the plant.
“A lot of the benefits will be for Ontario workers, for the Ontario auto industry,” he said.
Federal officials said earlier this week that Ontario has provided more than $500 million capital for Volkswagen, pointing to what Ford has described as “hundreds of millions” of dollars that Ontario has invested in infrastructure to support the Volkswagen plant, including for roads , highways and electricity connections.
Treasury Secretary Chrystia Freeland said Wednesday MPs from other provinces and other provincial governments have been asking what their provinces are going to get when they see Ottawa pour billions into Ontario car deals.
She said counties that benefit from the federal government’s more than $120 billion green industrial strategy should “pay their fair share.”
This report from The Canadian Press was first published on May 19, 2023.
