Stellantis, LG Energy Solution bringing $5-billion battery factory to Windsor

After months of speculation, the two companies have confirmed Canada’s largest pure electric vehicle investment yet: a $5-billion joint-venture battery cell factory situated in the heartland of Ontario’s auto industry.

March 23, 2022

Original article published in Electric Autonomy Canada

Today, capping months of speculation, Stellantis announced it has confirmed a partnership deal with LG Energy Solution to build Canada’s first large-scale battery cell manufacturing plant, in Windsor, Ont.

The $5-billion project will create around 2,500 jobs, have an annual production capability of 45 gWh and operate as a joint venture between Netherlands-based Stellantis — created last year in a merger between PSA and Fiat Chrysler — and South Korea-based LGES. The factory will offer a battery supply to the automaker’s North American auto plants — the nearest of which being the Windsor facility where Stellantis announced in 2020 it would invest $1.5 billion to retool and begin manufacturing EVs in 2024.

“Today marks a significant step not only for us here in Windsor, but for Stellantis as a company. We’ve just celebrated our first year together at Stellantis and what a major milestone this marks on our journey to transform ourselves into a truly sustainable mobility company of the future,” said Mark Stewart, chief operating officer at Stellantis of the largest single investment ever in Canada’s auto sector. “We are really proud to be here today. People have worked relentlessly tirelessly to make this happen.”

A team from Stellantis and LG were on hand to make the announcement at the City of Windsor Public Works Facility, along with representatives from three levels of government: minister of Innovation, Science and Industry François-Philippe Champagne; minister of Transport Omar Alghabra; Ontario Premier Doug Ford; minister of Economic Development, Job Creation and Trade of Ontario Vic Fedeli; and Windsor mayor Drew Dilkens.

Country’s own ecosystem

“Together with Stellantis and the Canadian government, we aim to collaborate and champion the country’s very own battery ecosystem,” said Youngsoo Kwon, CEO of LG Energy Solution. “I’m confident that our joint venture will…set a solid foundation for Canada’s battery industry right here at the heart of Canada’s automotive capital.”

LG is putting $1.5 billion into the project — which also has an R&D component — and holds a 51 per cent ownership stake in the joint venture, according to regulatory documents. And Stellantis still has another North American battery factory to announce in the United States; that one a joint venture with Samsung.

Stellantis says production will begin in the Ontario facility in 2024, with construction expected to begin this year on a 220-acre property adjacent to the city’s airport.

Reaction from across the industry was swift, with members of the Canadian Battery Task Force heralding the announcement as one of several “anchor investments” and an indication that Canada is once again being viewed as “an auto manufacturing powerhouse.”

Matt Beck, treasurer at the Battery Metals Association of Canada, summarized the manufacturing win by adding, “Canada has a wealth of battery metal resources, a talented workforce and an innovative culture. This investment further supports the development of a battery industry in Canada by affirming the growth of domestic battery manufacturing capacity and providing added market pull for the broader sector.”

Road to a battery factory

Windsor’s interest in the battery factory first became public in February 2021. At the time, the Windsor Essex Economic Development Corporation (WEEDC) revealed it was bidding for a $2-billion facility that would provide over 2,000 jobs, but city officials would not disclose the name of the interested company.

Electric Autonomy reported that story following statements by Stellantis head Carlos Tavares, that the automaker was considering Canada as a potential location for one of its two plants, and Premier Ford, saying he was going to try and convince Stellantis to locate a new plant in the province.

Last November, as well, federal lobbyist registry documents appeared on behalf of LG Energy Solution stating its intention to secure “funding to locate a battery manufacturing facility in Canada.” No lobbying activity for either Stellantis or LGES appears in the Ontario registry.

But, while the Ontario auto sector waited for battery news, next door in Quebec the factory announcements rolled in quickly, starting last fall and carrying on into 2022: to date, StromVolt, Britishvolt, BASF and General Motors have all pledged to set up either cathode or battery cell facilities in the province, reflecting Quebec’s aggressive push to develop its own EV battery supply chain.

Ontario was able to point to multiple automakers (Stellantis, Ford and General Motors) recently committing billions to retooling their factories to manufacture electric vehicles in the province, but the big battery manufacturing deal remained elusive.

“We will be doing everything that we possibly can to invest billions of dollars in the supply side, because that’s where the jobs are,” Vic Fedeli, Ontario’s minister of economic development, job creation and trade, exclusively told Electric Autonomy Canada ahead of today’s announcement.

“We are dealing with almost a dozen battery electric vehicle battery manufacturers from around the world. All of the investments from the companies we’re talking about are more than a billion dollars.”

Other supply chain holes

In trying to sell Ontario as a manufacturing destination for the EV economy on the global stage, industry advocates and politicians are relying on a suite of factors. These range from a lower cost of doing business to Ontario’s clean — though not as clean as Quebec — power grid, currently at 94 per cent zero-emission status (and the potential for 100 per cent with appropriate smart grid management).

While the Stellantis/LGES factory fills in one missing link in the province’s EV battery supply chain, there are still other critical areas of battery manufacturing that need to be addressed, namely, battery precursor materials of cathodes and anodes.

“We’re the only country in the Western Hemisphere with all of the raw materials that’s required for lithium ion batteries,” said Fedeli. “We will look to advance the production of precursor cathodes here in Ontario.”

Fedeli pointed to last month’s government investment of $250,000 (of a total of $950,000 public monies) in Electra Battery Minerals battery park, which the company hopes to open at the end of 2022. The funding followed an earlier $10-million joint investment by Ontario and the federal government in late 2020, when Electra was still known as First Cobalt.

One of the functions of the park would be to support battery production including cathode manufacturing — enough, the company says, for 1.5 million electric vehicle batteries annually. The facility could also support battery recycling and recovery of critical materials through that process.

Meanwhile, at the other end of the supply chain, Ontario is struggling to develop a robust consumer market for EVs.

Ontario is one of just four provinces (joined by Alberta, Saskatchewan and Manitoba) in Canada that don’t offer any EV purchase incentive after the Ford government repealed Ontario’s rebate in 2018. As a result, Ontario’s EV adoption lags well below the national average and is sometimesconsidered a second tier market for the release of new EV models.

But despite this, Fedeli tells Electric Autonomy that there are no plans to bring a rebate back: “It’s very important that we support and stand behind, financially, the OEMs and the battery manufacturers with billions of dollars. It’s 100,000 jobs in Ontario and we want to make sure that those 100,000 jobs continue in Ontario. So our investment is going to be focused on the supply side.”

LG not finished with Canadian investments?

Late last year, LG Chem, of which LG Energy Solution is a subsidiary, indicated it wants to make asignificant investment in a Canadian company — this time in battery recycling. In mid-December the Korean tech giant announced it signed a letter of intent for a $50-million strategic investment in Toronto-based battery recycler Li-Cycle to purchase over 2.2 million common shares.

The deal hasn’t been confirmed yet, but under the terms in the letter Li-Cycle would sell 20,000 tonnes of nickel over 10 years to LG’s North American operations. The supply deal would begin in 2023 and would be enough supply for LG batteries for 300,000 EVs.

“Sustainable recycling for lithium-ion batteries is critical to the electrification revolution. Li-Cycle is making economically and environmentally sustainable lithium-ion battery recycling a commercial reality through its innovat[ive] technologies,” said Byungchul Choi, department leader of LG Chem battery materials development in a press release.

The deal between LG and Li-Cycle is set to be confirmed in April 2022, according to the recycler’s first-quarter filings.