LG Energy Solution, Stellantis venture reach deal with Canada

Industry

Published: 06 Jul. 2023, 10:42

LG Energy Solution, Stellantis venture reach deal with Canada

Stellantis' chief operating officer Mark Stewart, left, and Kim Dong-myung, LG Energy Solution's head of advanced automotive battery division, pose for a photo at the ceremony announcing their joint venture to build an EV battery plant in Ontario, Canada, on March 23, 2022. [LG ENERGY SOLUTION]

LG Energy Solution (LGES) and Stellantis' joint venture reached an agreement with Canadian officials on EV battery plant subsidies in Ontario, the battery maker announced Thursday.

The binding agreement puts the construction of the battery module manufacturing facility in Windsor immediately back on track, the companies said.

The deal came two months after they suspended part of the project over a delay by the Canadian government in setting the conditions for incentives as promised to be on par with the U.S. Inflation Reduction Act (IRA), which provides tax credits of up to $7,500 to buyers of EVs assembled only in North America.

"We are pleased that the federal government, with the support of the provincial government, came back and met their commitment of leveling the playing field with the IRA," Mark Stewart, Stellantis' chief operating officer for North America, said in a release. "This collective effort enabled the deal to close, and we are now resuming construction on the site in Windsor."

In May, LGES and Stellantis said they had halted the construction of the battery module factory amid apparent haggling between the Canadian federal and provincial governments over who should pay more incentives.

While the battery cell plant was still under construction, the decision put the brakes on what will be more than a 4.8-trillion-won ($3.6-billion) joint venture between the two companies.

LGES and Stellantis launched their joint venture, NextStar Energy, in March last year to build an EV battery manufacturing plant with an annual production capacity of 45-gigawatt hours.

The Ontario plant aims to be completed in the first half of 2024.

NextStar Energy could receive as much as 19 billion Canadian dollars ($14.3 billion) in financial support from the Canadian governments over the next decade, the local outlet Windsor Star has reported, citing an estimate from an unidentified source.

The output from the Ontario plant will be supplied to Stellantis assembly plants in the area, which manufacture its brands such as Chrysler and Jeep SUVs.

BY SOHN DONG-JOO, YONHAP [sohn.dongjoo@joongang.co.kr]