Stellantis blocks battery plant construction as more support sought

By Ismail Shakil and Steve Scherer

OTTAWA (Reuters) -Automaker Stellantis has stopped construction at a more-than C$5 billion ($3.7 billion) electric-vehicle battery plant in Canada amid talks with the federal government about its support for the factory.

"Effective immediately, all construction related to the battery module production on the Windsor site has stopped," a spokesperson said, while adding that some construction related to battery cell production continues.

Stellantis says the government has not delivered what was agreed last year.

The move comes a month after Canada agreed to provide up to C$13 billion in subsidies and a C$700 million grant to lure German automaker Volkswagen AG to build its North American battery plant in the country.

Stellantis and South Korea's LG Energy Solution (LGES) had announced their battery plant investment in Canada last year, aiming for annual production capacity in excess of 45 gigawatt hours (GWh) and expected to create an estimated 2,500 new jobs in the Windsor area.

The investment, in which federal and provincial governments were also meant to contribute, was the largest ever in the Canadian auto sector at the time.

The federal government says it is in talks with Stellantis' management and the issues can be resolved.

"I am absolutely confident that we're going to get a deal. But I also want to point out that the resources of the federal government are not infinite," Finance Minister Chrystia Freeland told reporters, adding that the provincial government of Ontario must do its "fair share."

The Ontario provincial government says it has already signed a deal with the carmaker and is not in negotiations.

"It really worries me," Ontario Premier Doug Ford told reporters when asked about the construction halt. "We need the federal government to step up as they did for Volkswagen."

The Volkswagen battery gigafactory is the biggest single investment ever in Canada's electric-vehicle supply chain.

($1 = 1.3372 Canadian dollars)

(Reporting by Ismail Shakil and Steve Scherer in Ottawa and Nathan Gomes in Bengaluru; Editing by Pooja Desai, Stephen Coates and Leslie Adler)