Ontario Minister Announces $15 Billion Tax Credit Deal for EV Battery Plant

On Wednesday night, the province of Ontario announced that the agreement between Stellantis and LG Energy Solutions, for the development of the NextStar electric vehicle (EV) battery plant, could have up to $15 billion in tax benefits for the project.

According to Victor Fedeli, the minister of economic development, job creation, and trade, Ontario has committed to giving tax breaks of up to $5 billion over a period of 10 years, Fedeli also added that the other $10 billion in tax breaks would be given by the federal government.

“It’s not like the incentive money that the province and the feds delivered to the battery company,” said Fedeli. “We invested $500 million in capital. This is like a performance incentive or a tax break. It’s not a cheque per see.”

He claimed this agreement will keep Ontario “competitive on the global stage.”

“Quite frankly, what we ended up with is a brand new agreement between the province and the feds to secure these jobs,” he added.

“That’s a good deal for the workers. It’s a good deal for the industry. It protects thousands of jobs, especially in Windsor,” he said, adding that the agreement is conditional on the U.S. Inflation Reduction Act being maintained.

Stellantis issued a statement on Wednesday evening, confirming the agreement and announcing the restart of construction.

“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 [Inflation Reduction Act],” said Stellantis’ chief operating officer in North America, Mark Stewart.

Deputy Prime Minister Chrystia Freeland and minister of innovation, science, and industry, François-Phillippe Champagne, issued a statement on Wednesday night expressing their support for the deal and its positive effects on the Canadian economy and workers.

“It will create and secure thousands of jobs — both in the auto sector and in related industries across Canada — and will further solidify Canada’s place as a leader in the global electric vehicle supply chain,” said the statement.

Premier Doug Ford has stated that the province will pay one-third of the agreement’s cost. Ford also said he was certain that the province’s additional support for Stellantis would not set a  bad bargaining precedent for Ontario.

Last year, LG Energy Solution, a South Korean battery manufacturer, and Stellantis launched their $5 billion project, stating that it would generate 2,500 jobs and begin operations around 2024.

Stellantis COO Stewart acknowledged the impact of the U.S. Inflation Reduction Act, which introduced incentives for companies to establish EV plants in the United States. Stewart highlighted that this policy change has altered the dynamics of battery production in North America, posing challenges for Canada to manufacture state-of-the-art batteries at competitive prices without a comparable level of government support.

President and head of the Advanced Automotive Battery Division of LG Energy Solution, Dong-Myung Kim, said that Wednesday was “a good day not only for our joint venture, but also for Canada.”