U.S.-European automaker Stellantis is partnering with LG Energy Solution to make batteries for electric vehicles at a massive new plant in Canada, the largest ever investment in the country's auto sector, officials said Wednesday.
The joint venture commits $4.1 billion to build the facility in Windsor, Ontario that will supply batteries for a "significant portion" of Stellantis' electric vehicle production in North America, according to a statement from the companies.
South Korea-based LGES announced separately that it would spend another $1.4 billion to build a factory in the U.S. state of Arizona to make batteries for electric vehicle and tool makers in North America.
The decision was driven by growing demand in the region for rechargeable batteries for vehicles and wireless power tools, LGES said.
Construction of the Arizona plant is expected to begin in the coming months, with a goal of mass producing batteries there by the second half of 2024.
- Battery catalyst? -
The partnership with Stellantis fits into Canada's EV strategy to nurture local manufacturing of advanced lithium-ion batteries for the North American market.
Industry Minister Francois-Philippe Champagne, who was in Windsor for the announcement, called the venture "the largest investment ever in the auto sector in our nation's history."
He noted that Canada is "the only nation in the Western Hemisphere with the capacity and the materials to transform cobalt, graphite, lithium and nickel into the next generation of batteries which will be needed to power electric cars."
In a nod to that effort, the two companies said they expect the plant "to serve as a catalyst for the establishment of a strong battery supply chain in the region."
The facility, which will have an annual production capacity in excess of 45 gigawatt hours (GWh) and employ 2,500 workers, is scheduled to begin operation in 2024.
Stellantis, which was formed in January last year when Fiat-Chrysler and Peugeot merged, is aiming to shift towards battery-electric vehicles as tightening pollution regulations mean internal combustion engines will need to be phased out.
Carlos Tavares, the company's chief executive, said Wednesday Stellantis is aiming to sell five million electric vehicles or "50 percent of battery electric vehicle sales by the end of the decade" in Canada and the United States.
In Europe, where Stellantis also announced battery manufacturing plants in France, Germany and Italy, the company is planning for all of its vehicles -- including Jeep, Peugeot, Citroën, Opel, Fiat and Alfa Romeo -- to be electric by 2030.
"In total, we will rely on five gigafactories, together with additional supply contracts, to meet our planned battery capacity of 400 GWh by 2030," Tavares said.
Copyright 2022, Agence France-Presse