TORONTO, May 19 (Reuters) – The Ontario government on Friday offered to increase financial support for carmaker Stellantis’s (STLAM.MI) battery plant in the province, a move Canada’s industry minister proclaimed a sign of progress in ending a stalemate over the stalled project.
Stellantis on Monday stopped construction at a C$5 billion ($3.7 billion) electric-vehicle battery plant in Canada, which is being built in partnership with South Korea’s LG Energy Solution (LGES) (373220.KS), saying Canada had not fulfilled promises.
Stellantis and LGES announced their battery plant investment in March last year, but tensions emerged when the United States in August passed the Inflation Reduction Act (IRA), a massive package of clean-tech incentives for companies.
Canada’s federal government has argued that the province of Ontario, where the battery plant is being built, should pay its share to resolve the dispute.
Ontario Premier Doug Ford earlier this week pushed back against it but on Friday agreed to open the purse strings, though he declined to provide details.
“I will confirm…we’re putting more money on the table there,” Ford told reporters. “This is all about saving jobs and giving people the quality of life they deserve in southwestern Ontario,” he added.
Federal Industry Minister Francois-Philippe Champagne welcomed Ford’s comments and said he was very confident about coming to an agreement on the battery plant.
“We’re gonna get to an agreement and like I said, we see progress in the comments made by Premier Ford this morning,” Champagne told reporters in Washington.
Champagne also said he had a more than two-hour dinner with the president of LGES in South Korea this week and that the two have “a common understanding about the way forward” on the battery plant.
In April, Canada agreed to provide up to C$13 billion in manufacturing tax credits and a C$700 million grant to lure German automaker Volkswagen AG (VOWG_p.DE) to build its North American battery plant in the country. It was the biggest single investment ever in Canada’s electric-vehicle supply chain.
Ontario’s provincial government pledged C$500 million in direct investment to the German carmaker, the same amount it offered to Stellantis last year.
Earlier this week, Champagne said the federal government has increased its planned support to Stellantis and that to break the “stalemate,” it is important that Ontario “pay its fair share.”
Stellantis declined to comment.