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Stellantis, LG Energy Solution invest $4.1B for EV battery plant in Windsor

Detroit News
Mar. 23, 2022
Breana Noble

Michigan has missed out on another electric-vehicle battery plant — this time, to its neighbor across the Detroit River.

Stellantis NV and Korean battery maker LG Energy Solution on Wednesday said their joint venture will invest more than $4.1 billion (5 million Canadian dollars) into a battery manufacturing plant in Windsor, Ontario, creating 2,500 jobs. It will be the first large-scale, domestic, EV battery manufacturing facility in Canada, and the largest investment in the country’s automotive sector ever, according to the companies and political leaders. Construction is scheduled to begin later this year with operations expected to launch in the first quarter of 2024.

The gain for the city of Detroit’s southern neighbor is beneficial in strengthening the cross-border region’s automotive ecosystem and helps to secure the futures of Stellantis’ assembly plants in Metro Detroit, experts say.

But it also suggests just how competitive it is for the significant investments needed as the state’s largest industry undergoes a historic transformation toward electrification. Automakers need cell production near their plants, but also are opting for locations offering millions of dollars in incentives, low energy costs and other business advantages.

“It’s clearly identified where we’ve had weaknesses,” Carla Bailo, CEO of the Center for Automotive Research in Ann Arbor, said of the competition Michigan has faced in attracting EV investment. “And actions are being taken to solve them. The programs and the solutions are aligned. This is really critical that we have these private-public partnership solutions coming.”

The new battery plant could have an annual capacity of more than 45 gigawatt hours; the company declined to specify how many vehicles that would support. Stellantis said it is too early to determine whether hires at the plant could be Americans.

“A key part of our future” Mark Stewart, Stellantis’ chief operating officer in North America, said during a news conference, “is right here in Windsor with this first announcement of our first battery JV with LG Energy Systems.”

The 4.5 million-square-foot facility — the size of 112 National Hockey League arenas — will sit on 220 acres that is an empty field behind the city of Windsor’s Public Works Facility about 8 miles from Stellantis’ Windsor Assembly Plant.

The battery manufacturing site will support vehicle production in the United States and Canada. Stellantis will announce a second EV battery plant in the coming weeks that will be in the United States, Stewart said. It has a second joint venture with Korean battery manufacturer Samsung SDI for a plant with an initial annual capacity of 23 gigawatt hours that could grow to 40. The automaker declined to speculate whether the Windsor investment counts out Michigan.

“It’s not just one battery plant, and you’re done,” said Quentin Messer Jr., CEO of the Michigan Economic Development Corp., who noted the MEDC has been in conversations with Stellantis since it began its electrification journey. “We continue to talk and continue to be in active conversation” with Stellantis, though he would not specify if they were late-term.

“To say that we lost out would be saying that the game is decided at the score at the end of the first quarter.”

To secure the investment, Canadian municipal, provincial and federal governments offered “millions of (Canadian) dollars” in incentives to support the project, Ontario Premier Doug Ford said, to preserve Canada’s auto sector and build out its EV supply chain. Closing of the project is subject to regulatory approvals.

“The world is moving to clean tech, and this is Canada’s time to lead the way,” Canadian Prime Minister Justin Trudeau said in a recorded video message due to participation in a North Atlantic Treaty Organization summit.

It marks a continued reversal of fortune for the Great White North. Canadian auto workers union Unifor secured an investment to save Ford’s Oakville Assembly Plant during 2020 contract talks. General Motors Co. in November resumed truck production at its Oshawa Assembly Plant in Ontario after it was down for two years. Stellantis is expected to cut Windsor to one shift from two this summer, but has committed to investing $1.13 billion into Windsor by 2024 for a new platform supporting plug-in hybrid and electric vehicles. The EV battery plant is a positive sign that will happen.

“Now,” Windsor Mayor Drew Dilkens said. “we’re more assured today that future generations will be able to realize their dreams here as well.”

It also may bode well for the future of Brampton Assembly Plant in Ontario, experts said. Forecasters predict the factory that makes the Dodge muscle cars and Chrysler 300 sedan could be without product if the electric Charger and Challenger go to Belvidere Assembly Plant in Illinois. Brampton is more than 200 miles away from Windsor.

“I’m not concerned about the plant closure for Brampton,” Ardis Snow, chairperson for the Brampton unit at Unifor Local 1285, said last week. “I think we’ve positioned ourselves well for future investment and product.”

Canadian leaders championed the country’s access to the mining of critical materials for EV batteries, including cobalt, lithium and nickel. The province highlighted efforts to lower taxes, reduce electricity costs and cut red tape to decrease the cost of doing business in the province by $7 billion a year, said Vic Fedeli, Ontario’s minister of economic development, job creation and trade.

“Our government has a plan to attract more investment in the autos and manufacturing sectors, a plan that is connecting resources, industries and workers in northern Ontario to the future of clean steel and electric vehicles,” Ford said. “Today, we’re once again seeing that plan in action.”

The announcement from the automaker and battery maker also alleviates some concerns that a days-long blockade last month of the Ambassador Bridge by Canadian truckers protesting vaccine mandates that delayed commercial traffic, resulting in downtime at businesses like the Windsor Assembly Plant, would inhibit future investments in the region.

“We have been long-standing partners for nearly 100 years, right?” Stellantis’ Stewart said, noting 90% of the minivans produced in Windsor are delivered to the United States. “We see absolutely nothing different in terms of these batteries, as well.”

Stellantis currently doesn’t offer any fully electric vehicles in the United States, though it does have plug-in hybrid offers on its Chrysler Pacifica minivan built in Windsor, Jeep Wrangler and two-row Grand Cherokee. Batteries for those vehicles come from LGES and Samsung SDI.

Because EV batteries are heavy and transporting them increases risks for damage, automakers typically look for locations within proximity of their assembly plants. Stellantis has several within a 70-mile radius of the selected battery plant location, including two in Detroit and one each in Sterling Heights; Warren; Toledo, Ohio; and Windsor.

That means this investment in Windsor is a good thing even for Michigan, said Glenn Stevens, executive director of MICHauto, the automotive and mobility arm of the Detroit Regional Chamber.

“We really do look at and view Windsor and Ontario as part of the supply chain and ecosystem and cluster density here. This investment actually makes it stronger,” he said. It provides Metro Detroit plants “a committed source of batteries near them, which means those plants have a plan for the future.”

The automaker is investing $35.5 billion into electrification and software by 2025 and expects that half of its sales in the United States and Canada will be fully electric by 2030 with 25 models. To get there, it will need about 150 gigawatt hours of annual capacity for batteries in North America, according to its strategy shared earlier this month.

The Windsor battery plant is the fifth LGES has announced with a Detroit Three automaker. In partnership with General Motors Co., their Ultium Cells LLC joint venture is constructing battery plants in Lordstown, Ohio; Spring Hill, Tennessee; and Delta Township near Lansing. The location of a fourth plant has yet to be announced.

LGES also has a separate battery plant it solely owns in Holland for which the Michigan Economic Development Corp. on Tuesday approved almost $190 million in incentives for a $1.7 billion expansion to quintuple production there by 2024.

Meanwhile, Ford Motor Co. with Korean battery supplier SK Innovation Co. Ltd. opted to make an $11.4 billion investment for EV and battery production in Tennessee and Kentucky, leading to a public rift with Gov. Gretchen Whitmer.

“We did not have the ability to do what we as a state knew that we needed to do in order to retain investment in increasingly energy intensive events and advanced manufacturing,” Messer said, noting this was known prior to Ford’s announcement, but that it accelerated actions for site readiness, bipartisan funding allocation and cooperation with energy providers.

“We are significantly more and more competitive than we were a few short months ago, and I am confident we will be even more competitive in the future.”

Messer said the MEDC is emphasizing the hardworking talent and innovative DNA of Michigan residents, the government response demonstrated in recent months like for the battery investment in Delta Township, its environment protected from natural disasters like hurricanes, and access to water.

“Michigan is competing and has a compelling value proposition for any automaker, any electric battery maker,” Messer said. “And we plan to tell the Michigan story in it, and we’re taking steps to make sure that happens.”

Already there are signs of improvement: Business Leaders for Michigan in its state outlook in January had indicated the Mitten was underperforming in attracting electric-vehicle investments, especially as the state represents roughly a quarter of U.S. internal combustion engine-related jobs.

With the help of $1.5 billion for economic development approved by state lawmakers in December, however, the state is now outperforming that ICE share with five of 12 planned North American battery plants, including the expansion at LG’s Holland plant, Ultium Cells’ plant in Delta Township, and a line to pack together battery cells at GM’s plant in Lake Orion.

In total, LGES has secured more than 200 gigawatt hours annually in North America, which is about 2.5 million EVs. The manufacturer previously shared a commitment to invest $4.5 billion into North America. Bloomberg reported earlier Wednesday that LG Energy Solution also plans to supply cylinder-type batteries for U.S. startups from a new plant in Arizona.

“Through this joint venture (with Stellantis), LG Energy Solution will be able to position itself as a critical player in building green energy value chains in the region,” LGES CEO Youngsoo Kwon said in a statement. “Creating a joint venture battery manufacturing company in Canada, recognized as one of the leading nations in renewable energy resources, is key for LG Energy Solution as we aim to power more electric vehicles around the world.”

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