Canada and Ontario are jointly investing more than $1 billion to help Stellantis retool Canadian car plants to manufacture electric vehicles.

Stellantis, the new company created a year ago through the merger of Fiat Chrysler and the French PSA Group, is investing another $2.6 billion in electrification projects.

These include the creation of flexible assembly lines that can pump battery electric and hybrid vehicles into Stellantis plants in Windsor and Brampton.

Stellantis is also expanding its research facility in Windsor to include a battery pack testing center and an electric vehicle research center.

Innovation Minister François-Philippe Champagne said there is a major shift underway in the auto sector and that the Canadian industry plays a big part in it. Champagne said in an interview, "This is a landmark for electric vehicles made in Canada." Canada is investing $529 million and Ontario $513 million.

Last month, Canada and Ontario invested $259 million partly to convert GM's CAMI assembly plant in Ingersoll, Ontario, into the first comprehensive commercial electric vehicle plant in Canada.

In March, each pledged about $190 million to the Honda plant in Alliston, Ont., including upgrading it to produce electric vehicles.

With 500,000 jobs and a $16 billion contribution to Canada’s GDP, the auto sector is an important part of the Canadian economy, but it has been slow to adapt to the future of electric vehicle manufacturing.

There are currently only a few zero-emission vehicles rolling off Canadian assembly lines, including the Chrysler Pacifica hybrid made at Stellantis' Windsor plant and the Lexus RX 450 hybrid and Toyota RAV4 hybrid, both made at Toyota’s plant in Cambridge, Ontario.

In March, Stellantis and LG Energy Solutions also announced a joint $5 billion investment to build Canada’s first major electric vehicle battery plant.

Champagne said that with supply chain uncertainty and other global challenges, it is a major gain that Stellantis is looking to Canada for these investments.

He said, "To me, having a company like Stellantis that really had the choice to put these things in Europe or North America, and decided to put them in Canada, is a big vote of confidence in our workers."

Stellantis wants half of its North American car sales to be electric by 2030. Canada aims for higher targets with the goal of making one in five new cars sold zero-emission by 2026 and 60 percent by 2030.

By 2035, Canada intends to ban the sale of new internal combustion engines in passenger cars. In 2021, electric vehicles exceeded 5 percent of total vehicles purchased for the first time.

The government will soon announce details of the sales mandate that will enact quotas and financial penalties on dealers who do not meet electric vehicle sales share targets.