National Post (National Edition)
WHERE WILL THE MONEY COME FROM?
ANY SENSIBLE PERSON RECOGNIZES THAT OUR COUNTRY IS 1/10 THE SIZE OF THE U.S. IT DOESN'T MEAN WE HAVE AN UNLIMITED PURSE TO BE ABLE TO GET AS MANY BATTERY FACTORIES AS THE UNITED STATES WOULD HAVE. — DREW DILKENS, WINDSOR MAYOR
“Any sensible person recognizes that our country is 1/10 the size of the U.S.,” said Dilkens. “It doesn't mean we have an unlimited purse to be able to get as many battery factories as the United States would have. That would be sort of preposterous thinking. But, you know, one, two, maybe three?”
As the dispute over the Windsor battery plant stretches into its second week, a more pressing question is where the money will come from to provide IRAlevel subsidies to Nextstar.
In the initial aftermath of the work stoppage, Ford called on the federal government to put in more money, while Champagne said Ford's unwillingness to ante up was the problem.
Ford responded that he would put more money into the project, although he did not disclose many details. Champagne has characterized the work stoppage as “normal negotiations.”
Champagne had been doling out subsidies from the federal government's Strategic Innovation Fund, but that appears to be winding down: Already close to US$7 billion have been spent and the 2023 budget allotted only $500 million to the fund.
Some analysts have suggested that if Nextstar is willing to walk away from the project, the federal government should jump at the chance: Other automakers such as Ford Motor Co. agreed to retrofit an assembly plant in Oakville, Ont. to produce EVs for just $595 million in government capital construction subsidies.
Perhaps it could persuade automakers to build several assembly plants for less than it would cost to build one battery plant, analysts have suggested.
Others have suggested that backing out is not so easy. The negotiations with Volkswagen, for example, took eight months. Picking a site requires automakers to line up supply agreements, power agreements, and complex planning that cannot be easily undone.
Of course by that same token, it is also less likely that Nextstar would back out of building its Windsor battery cell plant.
Dilkens said that he's confident the “brinksmanship” will be resolved.
Windsor, he noted, had been through this before: in the past few decades, it saw numerous automakers pull up stakes and relocate operations to lower cost jurisdictions after the original North American Free Trade Agreement was signed in the 1990s.
Still, if Windsor has spent the past few decades enduring the whims of a free marketplace, the standoff over the battery plant is demonstrating that even an era in which industrial policy is ascendant is not free from risk either.
“We're used to the ups and downs of the auto world,” Dilkens said. “We take our punches, and we get back up.”