Stellantis, the maker of Jeep vehicles, has issued a warning that it may relocate its planned battery plant from Canada to the United States unless it receives billions more in state subsidies offered to a rival automaker. This development adds another layer to the ongoing battle among major manufacturers vying for green incentives globally. Stellantis, the fourth largest carmaker in the world, had previously partnered with South Korean electronics manufacturer LG to establish a C$5 billion electric-vehicle “gigafactory” in Windsor, Ontario, which received substantial subsidies from the federal and provincial governments.
However, after the United States passed the Inflation Reduction Act, providing significant subsidies for battery production, Ottawa matched those incentives to secure a deal with Volkswagen for a battery plant in St. Thomas, Ontario. Now, Stellantis insists on similar benefits from Canada or threatens to shift production to the US.
Canadian Prime Minister Justin Trudeau and Industry Minister François-Philippe Champagne were in South Korea attempting to salvage the project, with Champagne urging Ontario to contribute more funding to save the deal. However, Ontario argues that the federal government should provide additional financial support. This standoff places the project in a precarious position, and the Canadian Vehicle Manufacturers’ Association highlights the urgency of reaching an agreement to secure Stellantis’ investment.
Failure to compete with the generous subsidies offered by the United States could make it challenging to attract such facilities to Canada, especially as the industry’s electrification race intensifies. The potential loss of thousands of jobs adds to the gravity of the situation, as Canada’s largest auto workers union expresses concerns. Additionally, Stellantis recently called for a renegotiation of the Brexit deal, citing potential threats to its British plants due to changes in component sourcing rules.