Automotive analysts say moves by Canadian and U.S. governments behind Stellantis decision

Automotive analysts say the decision by Stellantis to look for alternative solutions for its future electric vehicle battery plant are a result of moves made by the Canadian and U.S. governments.

"They're simply looking to try to get the best government support that they can and this is one way to do it," said independent analyst Tom Venetis.

Ottawa's contribution to Stellantis' Windsor, Ont., plant was announced to be $500 million last March.

David Booth, senior writer at Driving.ca, says the number is now "chicken feed" compared to the $13 billion Volkswagen is getting in subsidies from the federal government to build its new plant in St. Thomas, Ont.

Venetis and Booth say the main difference of the funding is the Inflation Reduction Act (IRA), which was passed by the Biden administration a few months after the Windsor plant was announced. The legislation states if automakers build new EV battery factories only in the U.S., they receive a subsidy of $45 per kilowatt hour per battery, each year until 2032.

Booth says Volkswagen would have gotten the same amount of money in subsidies through the IRA as they did with Ottawa. He also said Stellantis should have been more patient when negotiating their deal with the Canadian government.

"They must have been kicking themselves in the foot," Booth said of Stellantis, when the IRA was implemented.

"If they'd waited two or three months, they could [have] either built the plant in the U.S. and gotten that money or blackmailed the Canadian government into giving them the same money."

Complicating matters in the U.S. is next year's presidential election.

Venetis says prominent Republican candidates hoping to be the party's nominee all came out against the IRA.

"However, many of those same Republicans are also very interested in securing more jobs for Americans and they have also been very vocal about bringing more manufacturing back onto American soil, which over the past few decades has been offshored," said Venetis.

Booth says while some parts of the IRA may get rescinded if the Republicans take control of the U.S. Congress, the parts concerning EV battery production are likely not in danger.

"Most of the plants that have benefited from these subsidies are in their constituencies," Booth said.

"It'd be really tough for them to rescind [the legislation], especially since for some reason the Republicans, at least under [Donald] Trump, have turned to protectionist policies, even more so than the Democrats."