Electric retooling at Stellantis plants part of $16-billion auto sector overhaul

OTTAWA — It has been an electric spring for Canada’s automakers with more than $13 billion promised in just eight weeks to build the needed battery supply chains and shift production from combustion-engine to plug-in vehicles.

That is on top of another $3.5 billion promised in the last four years, including investments to make electric school and transit buses, produce and process critical minerals needed to make batteries, for research and development facilities to push electric vehicle innovation and for retooling assembly lines at major car plants including Stellantis, Ford, General Motors, Honda and Toyota.

“Now Canada will lead in the EV supply chain, both from the mines to the car to the recycling,” Innovation Minister François-Philippe Champagne said in an interview.

The latest announcement came Monday, a $3.6-billion investment to upgrade the assembly lines at Stellantis’s plants in Windsor and Brampton, Ont., so they can make electric cars.

Canada is contributing $529 million, Ontario $513 million and the rest is coming from the company, part of a $45-billion global investment to transition to make electric cars and technology over the next three years.

The Canadian project will also create its first EV battery testing lab in North America and invest in an electric vehicle centre of excellence at an existing research and innovation centre in Windsor.

“We hope today’s announcement really helps bring assurance to our families, to our employees, and the local community that we are committed to Canada for the long run and for the next 100 years,” said Stellantis chief operating officer Mark Stewart.

The string of big announcements includes $2 billion from General Motors to make its Oshawa plant EV-ready and start making fully electric delivery vans at its CAMI assembly line in Ingersoll. Another $1.4 billion over six years will make the Honda plant in Alliston, Ont., EV-ready.

Canada and Ontario invested $259 million each towards the GM overhaul, and $131.6 million each to the Honda project.

Stellantis also in March promised jointly with LG Energy Solutions to build a $5-billion electric vehicle battery plant in Windsor, which will be the first full-scale EV battery maker in Canada. There is government money in that, but for commercial security reasons, they have not yet made public the amount.

Stellantis is aiming that by 2030, half of all vehicles it sells in North America, and all the vehicles it sells in Europe, will be electric.

But it doesn’t yet have a fully electric vehicle on the market, said Stewart, with two plug-in hybrids now and a third expected later this year. Starting in 2024, he said, Stellantis plans to introduce a new fully electric vehicle every year.

What’s needed to get the cars off the lines, he said, is money.

“I think the first step is the investments,” Stewart said. “All of us as more traditional automakers, we’re making the convergence right and the transition to that.”

He said the decision on which electric vehicles will be made in Canada is not yet finalized.

Canada’s recent electric vehicle explosion comes just a few months after fears American protectionism for the auto sector might shut Canada’s industry out.

The auto industry in Canada and the U.S. has been so integrated many cars cross the border multiple times during production. But President Joe Biden had suggested a lucrative tax credit to encourage the purchase of electric vehicles would be limited largely to those made entirely with unionized labour within the United States.

That plan, part of a US$1-trillion infrastructure bill, died at least temporarily amid U.S. domestic political squabbling, and in its ashes carmakers and Canadian governments have been rolling out the dough to expand production here.

But Biden’s singular focus on making the U.S. auto sector entirely self-sufficient continues. On Monday, the White House unveiled plans for US$3.16 billion in seed money to foster partnerships with the private sector aimed at boosting American production of batteries and components for electric vehicles.

The money, which comes from what would have funded that infrastructure bill, aims to end U.S. “reliance on competing nations” — a reference to China, the world’s largest supplier of the critical minerals used to make EV batteries, but also evidence of the risk Canada faces in being caught up in the president’s Buy American zeal.

Brian Deese, head of the National Economic Council, told a briefing Monday the pandemic’s impact on global supply chains created a lot of uncertainty in the auto sector.

“This will help to underwrite that private investment we need in the United States to build a reliable industrial capacity, and for the first time have a domestic end-to-end supply chain for electric vehicles and electric vehicle battery production,” he said.

But Champagne called Monday’s announcement a “major vote of confidence” in Canada’s auto sector.

“So for me to have a company like Stellantis who really had a choice to put these in Europe or North America, and decide to put that in Canada, is a major vote of confidence in our workers,” he said.

With 500,000 jobs and a $16-billion contribution to Canada’s GDP, the auto sector is a critical part of the Canadian economy. But it has moved slowly to adjust to the future of electric vehicle manufacturing, something Champagne said is changing as industry is starting to move quickly to transition itself.

Most of the recent announcements will begin to pay off in 2024 and 2025. 

There are also two cathode active material plants being built in Bécancour, Que., and new investments to build zero-emission school busies and transit buses in Quebec.

-with files from James McCarten in Washington, D.C.

This report by The Canadian Press was first published May 2, 2022.

Mia Rabson, The Canadian Press

Note to readers: This is a corrected story. An earlier version reported Stellantis’s contribution as $2.4 billion, based on a news release from the province of Ontario.