A day after Prime Minister Mark Carney made electric vehicles the centrepiece of his government’s new automotive strategy, one of North America’s major auto manufacturers stepped back from its ownership stake in Windsor’s EV battery plant NextStar as part of a $35.5-billion global writedown on what it admitted were overly ambitious EV plans.
Stellantis announced Friday that it is selling its 49 per cent stake in the $5 billion Windsor NextStar plant to joint venture partner LG Energy Solutions in exchange for a “nominal” fee, which LG’s disclosure documents say is $100. Stellantis said it’s also getting “other undisclosed favourable benefits.”
The NextStar plant is scheduled to receive up to $15 billion in subsidies over the next decade, with roughly two thirds coming from the federal government and a third coming from Ontario. Automotive industry sources estimated the two governments each contributed roughly $500 million toward building the plant, while the federal government paid two thirds of $500 million in battery production subsidies with the province covering a third.
At a Guelph press conference Friday touting the new plan’s virtues, federal Industry Minister Melanie Joly fired a shot across Stellantis’s bow, noting the company also decided to pause retooling of its idled assembly plant in Brampton.
“Stellantis decided to close Brampton. We will invest in those who invest in us,” said Joly, who reiterated previous threats to recover money paid to Stellantis, though it wasn’t immediately clear how much. “I’ve said we’d be getting our money back. I also said the Brampton contract was linked to the NextStar contract.”
Prior to pausing the Brampton retooling, Stellantis received $220 million from the federal government toward the project, out of more than $500 million the government had promised.
As for the announcement of the NextStar sale, Joly called it “very good news.”
“We just signed a partnership with South Korea on auto manufacturing last week. What are we seeing this week? LG buying out Stellantis,” said Joly, adding that Stellantis’s decisions don’t mean the EV market is failing.
“Electrification is a reality. It hasn’t hit North America as quickly as elsewhere, but it’s a question of time,” Joly said.
“The charges announced today largely reflect the cost of overestimating the pace of the energy transition that distanced us from many car buyers’ real-world needs, means and desires,” said Stellantis CEO Antonio Filosa in a statement on the massive writeoff.
Stellantis shares plunged almost 25 per cent in the wake of the news.
Stellantis and Korea’s LG described the sale of the EV battery and “electrical storage solutions” (ESS) plant as a mutual decision, and Stellantis said it will remain a NextStar customer.
“Full ownership of NextStar Energy will enable us to respond swiftly to the growing demand from the ESS market and position us to play a key role in Canada’s EV industry by securing additional North American-based customers,” said LG CEO David Kim.
“By enabling LG Energy Solution to fully leverage the Windsor facility’s capacity, we are strengthening its long-term viability while securing the battery supply for our electric vehicles,” said Filosa. “This is a smart, strategic step that supports our customers, our Canadian operations, and our global electrification road map.”
Industry experts said Stellantis was merely bowing to market reality by shedding some of its EV ambitions.
“This is more of an EV issue generally than a Stellantis issue specifically,” said Robert Karwel, automotive researcher at J.D. Power. “It’s five to seven per cent of the marketplace. It’s a technology that’s available, but it’s not exactly mass market.”
NextStar was unlikely to be able to reach full capacity just by building batteries for Stellantis, Karwel suggested.
“As an owner, Stellantis couldn’t fill the capacity. LG can now hopefully hit capacity by building for other companies as well,” Karwel said.
The union representing 800 of NextStar’s 1,300 employees struck an optimistic tone in a statement about the sale.
“Unifor looks forward to continuing the union’s collective bargaining relationship with LG Energy Solution. … The union commends LGES for their versatility in pivoting to maintain production in a changing marketplace and for LGES’s ongoing commitment to Canadian workers,” the union said.
That commitment, Unifor said, was shown when NextStar pivoted last November to also producing batteries for “electric storage solutions,” larger batteries not designed for vehicles.
At Queen’s Park, Premier Doug Ford replied “no” Friday when asked if he is concerned about Stellantis selling its stake in NextStar.
“Stellantis is making a financial decision … I think it was a good business decision to be frank,” said Ford “They’re still going to use their batteries for their vehicles.”
The economic assumptions made when the NextStar plant was built are no longer valid, said automotive analyst Ryan Robinson — and much of the blame can be laid at the feet of U.S. President Donald Trump, whose heavy tariffs and lighter environmental rules have been a heavy one-two punch.
“There was an assumption that this was going to be for the production purely of batteries for EVs across an integrated North American auto sector. That whole investment thesis has now changed,” said Robinson, director of automotive research at Deloitte.
In the context of Stellantis’s broader writedown, letting go of its share in NextStar for $100 and a pile of promises isn’t particularly shocking, said Robinson.
“When you’re writing down tens of billions of dollars, $2 billion or $3 billion isn’t really going to change all that much,” said Robinson
A spokesperson for Ontario’s Economic Development Minister Vic Fedeli said NextStar is in good hands with LG, and that any funding the plant has gotten only came after contractual targets were met.
“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,” said Fedeli spokesperson Jennifer Cunliffe.
On Friday morning, Fedeli spoke with Stellantis Canada president Trevor Longley, who reaffirmed their commitment to their operations and presence in Ontario, officials said.
—With files from Robert Benzie, Rob Ferguson and Tonda MacCharles
