Canada agrees to $11bn subsidy to save Ontario battery plant

Work on the battery plant is expected to begin immediately (LG Energy Solution)
The Canadian government has agreed to provide a subsidy of US$11.2bn to restart work on a stalled battery factory in the city of Windsor, Ontario, Reuters reports.

The project is being undertaken by NextStar Energy, a joint venture between South Korean battery maker LG Energy and automaker Stellantis, the Amsterdam-based company formed by the 2021 merger between Fiat Chrysler and Peugeot.

They propose a plant with an annual production capacity of 45GWh, employing 2,500 workers when it begins production in 2024. However, the two companies halted the project in May and demanded that the Canadian government provide state aid equal to that offered by the US government under its Inflation Reduction Act (IRA).

NextStar Energy announced yesterday that the Canadian government had signed an agreement to provide the subsidies demanded.

Mark Stewart, chief operating officer of Stellantis in North America, said the IRA had “fundamentally changed” the economics of battery making in North America, so that a plant in Canada would not be able to compete with a US equivalent unless it received a similar level of state aid.

He said: “We are pleased that the federal government with the support of the provincial government came back and met their commitment of levelling the playing field with the IRA.”

Dong-Myung Kim, president of the battery division at LG Energy, added: “It’s a good day not only for our joint venture but also for Canada. We are pleased to resume construction of the new plant, which will serve as a key base for the North American electric vehicle and battery market.”

LG Energy is planning eight plants in North America over the coming years. The company commented that it was “deeply grateful” for the support it had received from the South Korean government for the agreement with Canada.

In May, Korean president Yoon Suk Yeol and Canadian prime minister Justin Trudeau pledged to cooperate on sustainable growth at a summit commemorating the 60th anniversary of diplomatic relations between the two countries.

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  1. That’s what the British government should have already done if they wanted the country to be in the EV market

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