Good news for Brampton auto plant overhaul as feds reach deal with Stellantis

Automotive manufacturer Stellantis will be honouring its production targets and moving ahead with the retooling of its Brampton plant to produce electric and hybrid vehicles as the company has reached a deal with Ottawa.

Questions were raised about Stellantis’s plans for plants in Ontario following a pause in construction at the company’s Windsor plant earlier this year as more government money was sought to match what the United States would offer under its new Inflation Reduction Act.

Stellantis and LG Energy Solution said on Wednesday (July 6) that the Windsor plant development is back on track after reaching a “binding” financing deal with Ottawa and Ontario, and the province says Stellantis will uphold existing commitments in Brampton “including a production mandate.”

Last year Stellantis unveiled plans for a $3.6 billion overhaul at both its Brampton and Windsor plants, converting them to multi-energy vehicle assembly facilities ready to produce electric vehicles.

Plans to revamp the Brampton plant include a flexible assembly line capable of producing battery-electric and hybrid vehicles, and Stellantis said the facilities will be central to the company’s research and development operations in North America and serve the company’s needs for technology, process and product development.

Wednesday’s deal essentially “mirrors” the benefits Stellantis and LG would have received from the U.S. according to Ontario’s Economic Development Minister Vic Fedeli.

“We’ve heard that Stellantis expects, if they were in the United States, over the course of time, they would receive $15 billion in tax breaks, so that would be expected in Canada,” Fedeli said in an interview.

He said the timeframe for that figure is roughly over 10 years, and it will be dependent on start dates and the level of production they achieve. Ontario has committed to fund one-third of the costs.

Stellantis and LG Energy went back to the negotiating table months later when the U.S. IRA put billions of dollars in production tax credits on the table for battery makers south of the border.

In March, Canada reached a deal that will see Volkswagen get up to $13 billion in production subsidies for batteries they produce at a plant planned for St. Thomas and Stellantis and LG Energy wanted a similar agreement to continue on with their plant in Windsor.

The federal government called the deal “good for workers and good for Canada.”

“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 Deputy Prime Minister Chrystia Freeland and Industry Minister François-Philippe Champagne in a statement.

With files from the Canadian Press