Stellantis NV (NYSE:STLA), on Monday, made an announcement stating that it has halted the construction of its electric vehicle battery manufacturing facility in Windsor, Canada. According to a company spokesperson, this decision was made due to a disagreement with the federal government regarding subsidies.
"Effective immediately, all construction related to the battery module production on the Windsor site has stopped," the spokesperson said.
The move follows an agreement between Canada and Volkswagen (ETR:VOWG_p), made a month ago, to offer subsidies of up to C$13 billion (CAD 1 = $0.7423) and a grant of C$700 million to attract the German automaker to establish its North American battery plant within the country.
"It really worries me. We need the federal government to step up as they did for Volkswagen," Ontario Premier Doug Ford told reporters when asked about the construction halt.
But a Canadian federal government source familiar with the talks said the province of Ontario needed to offer more attractive terms to the automaker.
"The negotiations are ongoing," the source said. "We want Stellantis to stay....We've always said this is an important deal for us."
The agreement between Canada and Volkswagen for the establishment of a battery gigafactory, which was announced earlier this year, represents the largest single investment ever made in the electric-vehicle supply chain of the country.
LGES and Stellantis revealed their investment plans for a battery plant in the country last year. The objective was to achieve an annual production capacity surpassing 45 gigawatt hours (GWh) and anticipate the creation of approximately 2,500 new jobs in the Windsor area.
A spokesperson for Champagne, who described the deal as Stellantis's largest ever in the Canadian auto sector when it was announced, on Friday, said the "auto industry is crucial to the Canadian economy and to the hundreds of thousands of Canadian workers."
Shares of STLA are down 0.77% in afternoon trading on Monday.