Stellantis-LG $3.9B battery plant will 'create a new supply chain' in Canada

The C$5 billion (US$3.9 billion) battery plant destined for Windsor, Ontario, is the largest single automotive investment in Canadian history and is expected to spark the country’s electric-vehicle revolution with a new supply chain and thousands of jobs.

“I describe this as being as big as the transformation from the horseless carriage to the internal-combustion engine,” said Drew Dilkens, mayor of the city that will host Canada’s first large-scale battery factory.

“And, perhaps even larger when we consider the environmental factors.”

The plant is the result of a joint venture between Stellantis (49 per cent) and South Korea-based LG Energy Solution (51 per cent). It’s expected to employ about 3,200 people. At 4.5 million square feet it will be one of largest battery plants in North America.

The project and its details were announced at a March 23 press conference by senior company officials and government. Windsor assembled the land package for the site in the city’s east end and offered tax breaks, while the federal and provincial governments were expected to each kick in C$500 million (US$396 million) after a tweet from a Liberal MP cited Ottawa’s contribution.

The plant, slated to begin operations in August 2024, can produce 45 gigawatt-hours (gWh) of lithium-ion cells and modules a year to feed the automaker’s assembly operations in Canada and the United States, said Mark Stewart, chief operating officer of Stellantis North America. He would not relate that to volume, as battery packs can vary greatly in size, but the plant has the capacity to supply 450,000 100-kilowatt-hour packs.

The new battery plant will be one of two — the second will be in the United States — that will supply parts for the automaker's electric vehicles in the two countries. Stewart expects more than half of Stellantis’ vehicles to be electric by 2030.

EFFECTS FELT FAR AND WIDE

Across the sector, the joint venture “is going to create a new supply chain,” said Flavio Volpe, president of the Automotive Parts Manufacturers’ Association (APMA).

“We’re going to see jobs in battery-thermal-management systems, inverters [and] cell manufacturing. In addition ... this is going to help to underpin all the traditional suppliers of cars that we were worried are going to be made somewhere else.

“You’re not going to invest $5 billion in a battery plant to decide to make cars someplace else [other] than Windsor or Brampton, [Ont.]”

The battery factory will spur investment in a homegrown EV supply chain, including mineral extraction and refining, final assembly of batteries and EVs, and battery recycling, said Volpe.

“This should be felt as far out as Val-d’or [Que.] up to Timmins, [Ont.]”

Indeed, LG Energy is already scouting further “mines to mobility” expansion in Canada, said Denise Gray, a company spokeswoman based in Troy, Mich.

“We’ve got all the upstream supply chain that we also have to make sure we have access to,” she said. “Those are awesome opportunities for investment.”

Developing regional supply chains is key, Gray said. “From an automotive industry perspective, we always talk about just-in-time [delivery], which means having clusters of all of your partners together because you can reduce logistics costs and make sure you can manage quantities appropriately,” she said.

“We’re hoping to continue to develop supply chains, and the closer we can get it to where we are, the better.”

MORE INVESTMENT

While the plant will initially assemble lithium-ion cells, it will be able to adapt to new battery technologies and chemistries, said Stellantis’ Stewart.

“We’re not going to build a facility this large with LG without continuing to invest in the future, whatever it is — the best technologies for our customers in terms of best range, best cost effectiveness and best for the environment,” he said.

The investment also includes research-and-development commitments involving several Ontario education institutions as well as Stellantis’ research center, run jointly with the University of Windsor.

“We know the battery is the future of the electric car,” said Francois-Philippe Champagne, the federal minister of innovation, science and industry.“So there are always research and development commitments. ... We’re anchoring the ecosystem of the battery of the future right here, [and it] will have a rippling effect.”

Plant construction is expected to begin by summer, with the first products available in summer 2024. Full capacity is expected in 2025.

Completed modules will be shipped to a yet-to-be-disclosed location for battery-pack assembly, said LG’s Gray.

Job postings will range from assembly and skilled trades to manufacturing design, machinery and equipment adjustment, and logistics, she said. Hiring has yet to begin, but Ontario Premier Doug Ford said the spinoff jobs could total 17,000. The battery plant is the latest in a recent flurry of automotive investment announcements by Honda, General Motors, BASF and SK Posco. Champagne said that more announcements are in the works.

“Canada’s proximity to markets, resources, assembly lines [means] we are well positioned to attract these investments,” he said. “Some of the big decisions [globally] are being made today as to where these big plants will be located.

“We must stay strategic with a long-term vision to ensure we seize the moment.”