Stellantis considering Ottawa’s enriched subsidy offer as Windsor EV battery plant hangs in the balance

The fate of a Windsor electric vehicle battery plant rests on the fine print now.

Prime Minister Justin Trudeau said Tuesday the federal government has put forward an enhanced subsidy deal which he called “an offer that is both respectful of the taxpayer dollars that are going into it, but mostly, it’s one that is reasonable to create great jobs for the future for generations to come.”

When pressed to say whether the offer was as high as his government would go to stop the proposed 2,500-worker factory from being moved to the U.S., Trudeau and other officials declined to answer.

Executives are poring over the latest proposal that is potentially worth more than $13 billion over eight years to automaker Stellantis and its Korea-based joint venture partner, LG Energy Solution.

“Stellantis and LGES are in receipt of a written offer that is currently under financial and legal review,” Stellantis Canada communications head LouAnn Gosselin told the Star.

“We have nothing further to add at this time,” said Gosselin.

Stellantis is the parent company of Chrysler, Dodge, Jeep and Fiat, among other automotive brands.

After the Star last week reported a tentative resolution to spare the $5-billion factory, Premier Doug Ford confirmed that Queen’s Park would cover one-third of billions of dollars in Stellantis subsidies.

Asked if this was Canada’s final offer, Industry Minister François-Philippe Champagne said, “that is something between me and the company.”

“There’s discussions on both ways on that, but I think they understand that now we need to bring that to an end, to bring more certainty to the workers to the industry,” he said.

Champagne told the Star he has exchanged letters and texts with Stellantis but would not say if he expected a final answer Tuesday.

“I hope it happens very quickly,” Ontario Economic Development Minister Vic Fedeli told reporters at Queen’s Park.

He declined to say whether Ontario is willing to pony up more cash if necessary, but pledged to make the province’s financial contribution public once a new deal is closed.

“It’s really about securing those jobs for the people of Ontario,” Fedeli added, noting the plant will lead to thousands more spinoff jobs at factories feeding it. “The people of Windsor are looking for answers and we want to have those answers as soon as possible.”

Champagne justified spending billions in U.S.-style production subsidies for Stellantis, saying “those are generational opportunities,” and there is only a narrow window for Canada to attract large EV manufacturing plants.

“Most of them will be decided within the next six to 12 months in North America at least. So therefore, either you win now, or you’ll be out of that industry for 50 years or until there’s a new technology,” he said.

Sources, speaking confidentially in order to discuss internal deliberations, said Champagne delivered the enriched offer to Stellantis last Friday, after months of intense behind-the-scenes talks.

In April, the company demanded clarity from the federal government, which it said had promised in writing to match the U.S. offer of rich production subsidies contained in its massive clean-economy incentive package.

As talks dragged on, Stellantis dramatically halted construction of the Windsor plant on May 15, triggering another tense round of negotiations.

Champagne and Trudeau’s team tried to allay concerns of LG Energy Solution at a state dinner in Seoul last month. A Stellantis board meeting in Paris last week heard a presentation about what Canada was willing to put on the table.

With Ottawa’s promise to match the U.S. subsidies, Stellantis might receive even more than the up to $13.2 billion in subsidies that Volkswagen will get to build a similar but bigger EV “gigafactory” in St. Thomas near London. That’s because it would begin operations three years earlier.

Sources say Ontario taxpayers could be on the hook for more than $4 billion in payments to Stellantis — far more than the $500 million the province promised in March 2022 for the factory slated to open next year.

Despite payouts that could affect whether provincial Finance Minister Peter Bethlenfalvy balances the budget in time for the 2026 election, Ford said the outlay of public cash is worth it.

“I look at it as an investment … The spinoff jobs are staggering, absolutely staggering … this is for decades, moving forward and giving people certainty and stability,” he said last week.

The intervention by Ottawa and Queen’s Park should also secure the future of Stellantis’s Brampton auto assembly plant.

As first revealed by the Star on May 12, the Stellantis-LGES plant was at risk of heading stateside because of U.S. President Joe Biden’s lucrative subsidies in the Inflation Reduction Act.

In order to attract the Volkswagen EV battery plant to St. Thomas, Ottawa matched those subsidies, guaranteeing the German-based automaker between $8 billion and $13.2 billion in federal tax credits, depending upon the number of batteries it makes.

Ford’s government gave $500 million to Volkswagen, which will employ 3,000 workers when its $7-billion plant opens in 2027.

That money, like its initial Stellantis payout, was to cover the cost of infrastructure such as roads.

Robert Benzie is the Star’s Queen’s Park bureau chief and a reporter covering Ontario politics. Follow him on Twitter: @robertbenzie

Tonda MacCharles is Ottawa Bureau Chief and a senior reporter covering federal politics. Follow her on Twitter: @tondamacc

Rob Ferguson is a Toronto-based reporter covering Ontario politics for the Star. Follow him on Twitter: @robferguson1