Stellantis is selling its 49 per cent stake in Windsor electric vehicle battery plant NextStar to its joint venture partner LG Energy Solutions, as the automaker takes a $35.5 billion writedown on what it admitted were overly ambitious EV plans.
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.
In a statement, Stellantis said it will receive a “nominal” fee for the plant, “in return for other undisclosed favourable benefits.”
According to financial disclosure documents filed by LG, that fee is $100, an amount which pales in comparison to the $5 billion spent to build the plant.
“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.
“They also reflect the impact of previous poor operational execution, the effects of which are being progressively addressed by our new team.”
In Milan trading, Stellantis shares plunged almost 25 per cent.
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 Energy Solutions 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.”
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 the NextStar battery plant to its partner LG as the automaker pulls back on its electric vehicle strategy.
“Stellantis is making a financial decision … I think it was a good business decision to be frank,” said the premier, whose government has pledged billions in production credits for EV battery manufacturers in Ontario.
“They’re still going to use their batteries for their vehicles.”
A spokesperson for Economic Development Minister Vic Fedeli insisted LG was “well-positioned to take the lead on this historic $5-billion battery manufacturing plant in Windsor — the first of its kind in Canada.”
“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. This transfer in ownership will not lead to any job losses at the facility,” said Fedeli spokesperson Jennifer Cunliffe.
“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,” added Cunliffe.
There are currently more than 1,300 workers at the facility, with plans to increase to 2,500.
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 and Rob Ferguson
