Stellantis selling stake in Ontario battery plant as part of wider EV reset

Automaker Stellantis is selling its 49 per cent stake in an Ontario battery plant to its joint venture partner LG Energy Solution for a nominal US$100, as the automaker moves ahead with a broader reset of its electric vehicle strategy.

The deal will see LG take full ownership of the $5 billion NextStar Energy plant in Windsor, a move that the provincial and federal governments that have financially backed the project said was likely good news.

The move came as Stellantis took a roughly $36 billion (22.2 billion euro) charge related to electric vehicle investments.

Stellantis chief executive Antonio Filosa said on an analyst call Friday that the company was “dramatically” resetting its relations with suppliers, governments and other stakeholders as part of a “decisive reset” for the company.

“We are resetting our product plan and our EV supply chain, to reflect much more real customer demand and shifting regulation, following an initial overestimation of pace of adoption of electrification.”

The pullback comes as U.S. President Donald Trump has slashed regulations and generous incentives aimed at accelerating the transition to EVs.

LG Energy Solution chief executive David Kim said the company still sees growth opportunities in North America by having a key production hub in Canada.

“Full ownership of NextStar Energy will enable us to respond swiftly to the growing demand from the (electrical energy storage) market and position us to play a key role in Canada’s EV industry,” Kim said in a statement.

Given the swift changes in the EV market, NextStar has moved to delay vehicle battery production and retool to make batteries for energy storage.

NextStar Energy was established as a joint venture by the two companies in 2022, later securing a potential $15 billion in production incentives from the Ontario and federal government.

LG disclosed its token purchase price of Stellantis’ share in a regulatory filing, where it also disclosed that the automaker had invested US$980 million in the plant.

The project currently employs more than 1,300 people, with a long-term target of 2,500 as it grows to full production.

Ontario Premier Doug Ford downplayed the implications of the Stellantis decision.

“Stellantis is making a financial decision. They’re still going to use their batteries for their vehicles, said Ford.

“I think it was a good business decision, to be frank with you,” he said.

Federal Industry Minister Mélanie Joly said the continued investment from South Korea’s LG is encouraging and complements other efforts to increase trade ties.

“It’s good news for LG to anchor itself even more in Windsor. Last week we signed a partnership with Korea on advanced manufacturing and the auto sector.”

Jennifer Cunliffe, a spokesperson for Ontario Economic Development Minister Victor Fedeli, said LG is well-positioned to take the lead on the plant.

“The NextStar facility will continue to produce batteries for energy storage systems and for EVs as they broaden their customer base and support long-term growth in the Windsor region,” Cunliffe said in a statement.

“As with all of our investments, Ontario has clear, and strong, guardrails in place to ensure that provincial funding is only disbursed when specific project milestones and job creation targets are met.”

The province said Fedeli on Friday morning spoke with Trevor Longley, president of Stellantis Canada, who reaffirmed the company’s commitment to its operations and presence in Ontario.

The companies said Stellantis remains a committed customer and will continue to source battery products from NextStar Energy.

“This is a smart, strategic step that supports our customers, our Canadian operations, and our global electrification road map,” Filosa said in a statement.

The decision says less about Ontario manufacturing than it does about the automaker, said Brendan Sweeney, managing director of the Trillium Network for Advanced Manufacturing.

“This is much more about the future direction of Stellantis than it is about the automotive industry broadly,” he said.

He said it also forms part of a longer-term trend, which the Trillium Network highlighted in a report earlier this week, of U.S. automakers steadily pulling back from Canadian production while Japanese automakers have kept a steady footprint.

The commitment by LG shows further promise of alternatives to the Detroit Three, said Sweeney.

“LG is in a better position to run a battery plant than Stellantis is, so maybe this is good news, he said.

Other U.S. automakers have also struggled with the U-turn in American EV policy and the slower-than-expected pace of adoption. Ford Motor Co. took a US$19.5 billion charge in December and General Motors announced a US$6 billion charge in January, both related to EVs.

Sweeney said there is growing recognition that the pace set by regulators wasn’t realistic, but he said the market will continue to grow.

On Thursday, Prime Minister Mark Carney announced that the federal government was dropping its EV mandates in favour of stricter emissions standards for the auto sector, as well as reviving an EV rebate program.

Carney said the government will also launch consultations on how to strengthen an existing program that rewards automakers who maintain their Canadian production footprint through lower tariffs on vehicles coming in from the United States.

The plan is to expand the program into a tradable system that will give credits to those who produce and invest in Canada, and require those that don’t to buy those credits to avoid tariffs, he said.

The plans, which also include $3 billion in funding, are part of an effort to transform Canada’s auto sector into a global leader in electric vehicles, said Carney.