LGES, Stellantis resume Ontario plant construction as subsidy deal reached

Stellantis, a global automaker, and LG Energy Solution, a South Korean battery manufacturer, have resumed construction at their joint-venture electric vehicle (EV) battery plant in Canada after securing an enhanced package of government subsidies. The two companies would get increased subsidies totaling $3.7 billion from the federal government and the state of Ontario. Stellantis and LG announced the facility in March 2022, with completion targeted for 2024, creating 2,500 jobs will be generated as a result. The plant’s production capacity once it is running will be 45 gigawatt-hours annually.

However, after the US Inflation Reduction Act (IRA) was passed, production ceased as the two companies competed for the same subsidies. The plant’s construction was put on hold in May, 2023 while they lobbied the government for subsidies that would be competitive with the IRA. Neither company has revealed what the updated subsidies amounted to.

In June 2023, it was revealed that Canadian subsidies for a similar battery plant built by Volkswagen, also in Ontario, would cost the government C$2.4 billion more than had previously been estimated. In addition to a C$700 million federal government grant, Volkswagen was initially scheduled to get C$13.2 billion in tax credits for the building of the the plant. However, according to the reports, this sum increased as a result of the IRA’s competitiveness, which altered the “tax treatment” of the subsidies.