Last week, Stellantis NV (NYSE:STLA) and its partner LG Energy Solution Ltd (KS:373220) halted construction on its $3.7 billion EV battery plant in Windsor, claiming the federal government “has not delivered what was agreed to.”
The new auto plant was announced in March last year, but tensions emerged when the United States passed the Inflation Reduction Act (IRA), a massive package of clean-tech incentives for companies.
Early last week, Canada's Industry Minister Francois-Philippe Champagne said the federal government had increased its planned support for Stellantis and that to break the "stalemate," it is important that Ontario "pay its fair share."
Friday, Premier Doug Ford of Ontario announced that his government would increase its financial support to help Stellantis resume construction.
However, Ford said Wednesday, at an unrelated skilled trades funding announcement in London, that the future of Stellantis’ electric battery plant in Windsor is in the hands of the federal government after the province offered more money in a bid to help save the deal.
“As you know, we put in our fair share and now we’re stepping up again to put more money because it’s all about the people, it’s all about making sure they have the jobs down in Windsor region and right across southwestern Ontario,” said Ford
Ford was asked Wednesday if providing additional funds sets a bad precedent.
“No, it doesn’t at all. It creates economic development,” he said.
“If you want to talk about Stellantis, that town before we took office was hurting. It’s no different than St. Thomas. You could shoot a cannon down the streets of Windsor and not hit anyone.”
While the full amounts have not to be disclosed, all levels of government were expected to provide financial support.
Last month, the Prime Minister Justin Trudeau received a letter from the CEOs of both Stellantis and LG, expressing their disappointment in Ottawa's failure to fulfill its commitments. The CEOs highlighted that on five separate occasions, Ottawa had provided written confirmation of its intention to match production incentives outlined in the United States' Inflation Reduction Act (IRA). However, to date, those commitments have not been honored.
Shares of STLA are down 0.49% near end-of-day trading on Wednesday.