LGES, Stellantis Restarts Construction of Canada Plant After Reaching Subsidy Deal Agreement

LG Energy Solution revealed on Thursday, July 6, that its joint venture with Stellantis N.V. was able to reach an agreement with the government of Canada regarding the terms of subsidies. As a result, the construction of its electric vehicle battery factory in Ontario will now continue.

As per Yonhap News Agency, the agreement puts the construction of the manufacturing facility back on track after issues with subsidy stalled it. LG Energy Solution confirmed that it had resumed construction two months after suspending the project due to the Canadian federal and local government’s delay in granting incentives which are equivalent to the U.S. Inflation Reduction Act (IRA), which gives up to $7.500 tax credits to buyers of EVs assembled in 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,” Stellantis’ chief operating officer for North America, Mark Stewart, said in a statement. “This collective effort enabled the deal to close, and we are now resuming construction on the site in Windsor."

The president and head of LG Energy Solution’s advanced automotive battery unit, Kim Dong Myung, added, "We are happy to finally move forward with building the country's first major battery plant and be a central part of the local battery ecosystem."

Reuters reported that LGES and Stellantis’ JV suspended the building of a facility located across the river from Detroit, where Stellantis is operating for its business in the U.S. They stopped the construction in May and demanded support from Canada, similar to America’s IRA.

In any case, Stellantis and LGES announced their investment plan for the building of the EV battery module factory in March 2022. However, tensions developed a few months later when the U.S. passed the IRA.

Photo by: LGES Newsroom