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Electric vehicle wars
Ahead of the G-7 summit in Japan, PM Justin Trudeau stopped in South Korea to chat with President Yoon Suk Yeol about security and economic ties. At the top of Trudeau’s list of priorities? Convincing South Koreans that Ottawa remains committed to Canada’s first electric-vehicle battery plant in the state of Ontario that, according to the companies building it, is currently on the chopping block.
But what does an EV mega factory in Windsor, Ontario, have to do with … South Korea?
Quick recap: The companies involved, Canadian auto giant Stellantis and Korean battery maker LG Energy Solution, have invested $5 billion in a mega plant that is scheduled to open next year. The project’s goals are ambitious: produce 1 million EV batteries annually and hire up to 3,000 people by 2027.
But Stellantis abruptly stopped construction this week, saying that Trudeau’s government was “not delivering on what was agreed to.” Ottawa had pledged around $1 billion, but that was before the Biden administration’s Inflation Reduction Act, which incentivizes companies to build up the EV industry in the US exclusively, wooing them with lucrative subsidies.
In response to a recent deal Ottawa made to provide up to CAD$13 billion worth of subsidies to lure Volkswagen to build a plant in Canada, Stellantis and LG have gone back to the well, reportedly demanding more support from Trudeau and threatening to pull the plug unless it gets the same treatment as the German automaker.
The federal government, for its part, says that Ontario’s provincial government must also pay its “fair share” to fund the subsidies.
Indeed, this row shows that the ripple effects of Biden’s protectionist IRA – which has also caused skirmishes with Mexico – are still reverberating almost a year after the bill was passed.
Still, there are signs that some cross-border tensions over the issue are easing, with US Transport Secretary Pete Buttigieg announcing this week the creation of a nearly 900-mile EV charging corridor between Kalamazoo, Michigan, and Quebec City, the first of its kind.
Secretary Buttigiegspoke about this and more with Ian Bremmer on this week’s episode of GZERO World. Catch a clip here and the full interview on PBS stations starting this Friday. Check local listings.Canadian Prime Minister Justin Trudeau arrives at Hiroshima Airport in Japan.
Ahead of G-7, Canada seeks cooperation in Asia
Trudeau landed in Hiroshima on Thursday to discuss global security, economic resilience, climate change, and energy with the other G-7 leaders. As in South Korea, Canada’s top business priority is likely to be seeking markets for critical minerals.
While Trudeau is there, he may seek a quiet word with allies about AUKUS – the Indo-Pacific security alliance between Australia, the United Kingdom, and the United States — which Canada appears to want to be part of after all.
Trudeau will see Joe Biden in Hiroshima, but the U.S. president is expected to fly home early in an effort to reach a debt-ceiling deal. The wrangling at home forced Biden to cancel a planned trip this week to Australia and Papua New Guinea, where he was to meet with the other leaders of the Quad from Australia, Japan, and India. The Quad aims to counter China's rising influence in the Indo-Pacific, so abruptly bowing out sent mixed messages about US priorities in the Asia-Pacific – and, since China is no fan of the Quad, likely pleased Xi Jinping. In fact, the Sydney Morning Herald declared the last-minute cancellation a gift to Beijing.