Ontario covering one-third of incentives for both Stellantis and Volkswagen plants
CBC
The Ontario government has agreed to federal demands to put more provincial money on the table to save the Stellantis-LG electric vehicle battery plant in Windsor and help subsidize the Volkswagen battery plant in St. Thomas, Ont.
The new auto pact between the Canadian and Ontario governments will see the province cover one-third of the production incentives for both plants, rewriting the terms of the Volkswagen deal, which was initially announced in April.
The deal between the two governments, announced Thursday, is a product of months of negotiations between the two levels of government and the companies involved.
"Ontario has stepped up on both Stellantis and VW and is paying a full third for each of those two projects," Deputy Prime Minister Chrystia Freeland told a news conference in Vancouver on Thursday. "This is a great day for Canada."
Stellantis and LG announced Wednesday that they had reached a deal with Canada and Ontario for their $5-billion plant.
The two governments say the agreement will see the companies receive performance incentives of up to $15 billion over about 10 years. Volkswagen could receive up to $13 billion in incentives under its deal.
A federal government source said Ottawa signalled to the Ontario government as early as last fall that there was an expectation the province would have to pay more to land the battery plants.
The source said that expectation was reiterated in a letter sent to the provincial government in January as all parties moved to finalize the Volkswagen deal. The source said Ottawa didn't want to be seen paying 100 per cent of the costs in a deal that primarily benefited one province.
Multiple federal sources said this was the expectation even after the Volkswagen deal was announced with no defined provincial contribution to the production subsidies that helped close the deal to build the gigafactory in St. Thomas, Ont.
"When it comes to Volkswagen, what we said to Ontario is ... listen, this is a generational opportunity" Industry Minister François-Philippe Champagne told CBC's Power & Politics on Thursday. "This is probably the biggest transformation we've seen in the industrial landscape in modern times, and therefore we need to be in this together."
Stellantis and LG stopped construction on the facility in May as they pressed the federal government to match what the United States would offer under its new Inflation Reduction Act.
When that happened, the federal government saw it as an opportunity to secure a greater provincial investment in the Volkswagen plant, the source said.
Champagne would focus on dealing with the companies, the source said, while Freeland would focus on Ontario Premier Doug Ford.
A second federal source with knowledge of the negotiations described the increased financial commitment from Ontario in both the Stellantis and Volkswagen projects as a "line in the sand" for Freeland.