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The grant to Electrovaya will help the company bring batteries to market for the electric and plug-in hybrid vehicles.
McGuinty has already committed to providing rebates of up to $10,000 to consumers who purchase the vehicles.
The move to electric cars has been slow to date but is now accelerating, he told a crowd at Electrovaya.
"We've turned a corner and now the electric car has become, well, inevitable," he said. "And the race is on."
The Mississauga plant grant is expected to create 240 new jobs and retain another 50 jobs.
The company has already signed deals with automakers in Europe, Asia and North America.
"There are at least 12 major manufacturers now working to produce an electric car.... We want Ontario to be part of that," McGuinty said. "Our goal is to have one in every 20 cars on the road to be electric by 2020."
A group of protesters, unhappy with government plans to build a gas-fired electricity plant in the area, formed a quiet picket line in front of Electrovaya.
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