May 22, 2022

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ANALYSIS: Could London land a large electric-vehicle parts plant?

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The London region may be a “player” in provincial government talks to land another large-scale electric vehicle battery plant, expected to be announced by year’s end, automotive industry experts say.

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The Ontario government is in talks with several electric vehicle battery manufacturers to open another plant in this province, as automakers move fast to assemble electric vehicles partnering with battery makers, Vic Fedeli, Ontario economic development minister, said Thursday.

If more battery plants are in Ontario’s future, London and Southwestern Ontario have to be looked at as a possible new home, officials said.

“I think London region is a player in this and I wouldn’t discount it. It’s a player when it comes to major automotive assembly,” said Flavio Volpe, president of the Automotive Parts Manufacturers Association, a national agency representing parts manufacturers.

“Potential investors understand the labour pool, transportation access and it’s on the Highway 401 corridor.”

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Volpe envisions an EV (electric vehicle) battery supply chain extending from Quebec to Windsor, with London an important stop along that route. “It puts London in the sweet spot, the radius for battery assembly.”

Fedeli, the minister of economic development, job creation and trade, would not say with whom the government is talking or where a plant may land, but was upbeat about Ontario getting both a small-scale EV investment that will be announced soon and a major manufacturing plant by year-end.

“We’re negotiating with battery manufacturers as we speak,” Fedeli said. “We’re continuing to negotiate successfully for another battery opportunity. It’s not imminent, we’re still negotiating.”

The automotive sector is coming off a series of major announcements, including a $5-billion investment in Windsor by automaker Stellantis and South Korean battery maker LG Energy Solution, for Canada’s first large-scale vehicle electric battery plant.

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It will employ about 2,500 with full production expected by 2025.

GM Canada announced $2 billion for the Cami plant in Ingersoll to assemble two electric commercial vans and a second pickup truck at its Oshawa plant. Ford has pledged $1.8 billion to make electric vehicles at its Oakville plant, and Honda a $1.4-billion investment for hybrid vehicle production in Alliston.

“There are 100,000 men and women working in the auto sector today . . . these are important jobs to Ontario and the auto sector,” and that number will grow due to recent investments, Fedeli said.

Industry observers spoke on condition of anonymity given the sensitivity of the timing. They believe Ford of Canada is looking to open a battery manufacturing plant in Ontario with an industry partner, and has looked at the London and St. Thomas area. Ford of Canada will assemble five electric vehicle Lincoln SUVs at its Oakville assembly plant by 2025.

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“I would think the London area has to be considered,” as a site for another battery assembly plant, said Brendan Sweeney, director of the Trillium Network for Advanced Manufacturing.

“London has the transportation network, there are people here who know this industry and how it works. This area has a workforce that understands and appreciates manufacturing.”

Eastern Ontario, particularly Oshawa, and Alliston, home of GM Canada and Honda respectively, may also be in contention to land a plant, he added.

Kapil Lakhotia, chief executive London Economic Development Corp., believes London and Southwestern Ontario could accommodate the demands of a new battery manufacturing plant.

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“We’re working to ensure we’re in the running for targeted investments, such as EV and battery manufacturing and their supply chain,” he said. “London has a strong track record of attracting new greenfield investments, of strategic investments. We think we are in the radar.”

Lakhotia declined comment on whether he has reached out to the province, neighbouring municipalities or automakers on pitching the city and region for a plant.

Volpe confirmed the Ontario government is “definitely in talks with other companies” for a large-scale battery manufacturing plant. He sees 10 to 20 battery plants in North America opening over the next 10 to 15 years. He believes Ontario will land at least one more battery plant and maybe about a dozen smaller plants supplying the EV sector.

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“Every automaker will need a battery supplier,” said Volpe.

Fedeli also pointed to the benefits of battery manufacturing to help drive growth in the mining sector in Northern Ontario, where he is MPP for Nipissing.

Minerals that are needed to make a lithium ion battery, lithium, nickel and cobalt, are mined in Ontario.

“Our job is to protect and create new jobs, to make sure these vehicles are made here. We’re sliding all our chips in, we’re all in on this,” Fedeli said.

In 2018, preceding the current Ontario government, Toyota announced a $1.4-billion investment for its plants to assemble hybrid vehicles. This week Toyota began production of its Lexus NX, small sport utility vehicle and its hybrid variant.

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