Taxpayers should be concerned about $15B deal for Windsor, Ont., EV battery plant, advocacy group says | CBC News

The $15-billion agreement to keep an electric vehicle (EV) battery plant in Windsor, Ont., is “massively expensive for taxpayers,” says the Canadian Taxpayers Federation.

“These big corporations are getting buckets of cash courtesy of cost to taxpayers while the rest of us get tax hikes,” said Franco Terrazzano, federal director for the Ottawa-based federation. 

“We have governments that are choosing to help multinational corporations over taxpayers.” 

On Wednesday, it was announced that Stellantis and LG Energy Solution had agreed to a deal to continue to build the NextStar EV battery plant in Windsor.

We think Stellantis should be getting $0 from taxpayers.– Franco Terrazzano, Canadian Taxpayer Federation

Victor Fedeli, minister of economic development, job creation and trade, told CBC News the province would provide up to $5 billion in tax breaks based on production over a 10-year term. He said the other $10-billion in tax breaks would come from the federal government.

LISTEN | Minister of economic development speaks on the Stellantis deal:

Terrazzano said he’s concerned about how this deal could affect future negotiations with other large companies. 

“Taxpayers have to be worried about the precedent that this sets,” he said.

“How many other corporations are going to get sweetheart deals now?

“We think Stellantis should be getting $0 from taxpayers.”

Others are calling it a once-in-a-lifetime chance for Canada to carve out its place in the EV industry. 

Stellantis initially paused construction on the module portion of its EV battery facility in May, saying it was looking into “contingency plans,” claiming the federal government hadn’t kept its promises in negotiations.

The deal for the facility, due to open in 2024, was upended by the passage of the United States Inflation Reduction Act (IRA), which includes production incentives for companies building EV batteries stateside. 

WATCH | What the deal to resume construction at Windsor’s NextStar Energy plant means

What the deal to resume construction at Windsor’s NextStar Energy plant means

Head of the Automotive Parts Manufacturers Association Flavio Vople gives his reaction to the deal, the expected costs and what effect these negotiations happening in public have moving forward.

Canada’s minister for innovation and industry said it’s unlikely to expect many more similar deals.

“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,” said François-Philippe Champagne.   

“I would say we are firmly in the leading position when it comes to this generational transformation in the auto industry.”

Champagne hinted “one or two” more deals could be coming — but said Canada cannot afford more deals similar to the IRA, which offers tax rebates.

“That’s going to be it because that’s what Canada … can afford,” he said.

“We cannot afford to do what the United States did necessarily, but we want to keep our fair share of the auto sector in North America.”

Windsor–Tecumseh MP Irek Kusmierczyk said the NextStar deal, as well as a similar deal with Volkswagen for a plant in St. Thomas, Ont., “anchored” Canada in the automotive supply chain. 

“We’re trying to build here … everything from mines and minerals, to building electric batteries, to building electric vehicles,” he said.

“We want all of it. And these two strategic investments in Windsor and St. Thomas really bolster that supply chain down.”

U.S. bill ‘changed landscape’

In May, Stellantis said it was moving to “contingency plans” because the federal government wasn’t honouring its agreement. That’s when the automaker stopped most of its construction at the site.

Word of a tentative deal being reached was first reported by the Toronto Star on May 31.

Canada’s financial package with another automaker, Volkswagen, was believed to be connected to the impasse, according to industry experts, as was new U.S. legislation that enables unprecedented incentive offers for companies — something Canada could have difficulty matching.

WATCH | Windsor, Stellantis and subsidies: A look at how we got here:

Windsor, Stellantis and subsidies: A look at how we got here

In a media release, Mark Stewart, chief operating officer of Stellantis, said the U.S. Inflation Reduction Act, which added incentives for companies to locate EV plants south of the border, “changed the landscape for battery production in North America, making it challenging to produce competitively priced, state-of-the-art batteries in Canada without an equivalent level of support from government.”

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

LG Energy Solution and Stellantis originally announced the $5-billion project last year, and said it was expected to create 2,500 jobs and open sometime in 2024.