Stellantis Sells Ontario Battery Factory Stake to LG Energy Solution
LG Energy Solution has acquired full ownership of NextStar Energy from Stellantis, marking a significant shift in battery manufacturing in Canada. This move ends a joint venture that began in 2022 to establish a large-scale battery manufacturing facility in Windsor, Ontario.
Details of the Ownership Change
The sale of Stellantis’s 49 percent stake to LG Energy Solution was publicly announced on a Friday morning. However, the financial specifics of the transaction have not yet been disclosed. Despite the ownership change, Stellantis remains committed to sourcing battery products from NextStar Energy.
Workforce and Employment Goals
Currently, the Windsor plant employs around 1,300 people, with plans to expand to a workforce of 2,500 in the future. The Ontario government has assured that there will be no layoffs resulting from this ownership transition, as stated by Jennifer Cunliffe from the office of Vic Fedeli, Ontario’s Minister of Economic Development, Job Creation, and Trade.
Investment and Economic Impact
The federal government has pledged up to $10 billion in production subsidies for NextStar Energy, with an additional $5 billion from the provincial government. Danies Lee, CEO of NextStar, highlighted that this new ownership structure reinforces Canada’s leadership in battery manufacturing. It also promises long-term investments in the workforce and manufacturing capacity, delivering sustained economic benefits for both Canada and Ontario.
Reactions and Market Response
Antonio Filosa, CEO of Stellantis, noted that this arrangement enhances the battery supply for electric vehicles. He emphasized that enabling LG Energy Solution to utilize the plant effectively strengthens its long-term viability.
Simultaneously, Stellantis announced a significant reduction in its electric vehicle ambitions, leading to a sharp decline in its shares. The company’s stock plummeted by as much as 25 percent on the same day, reaching its lowest point since the merger that formed Stellantis in early 2021.
Future of Electric Vehicle Mandates
On the same day as the ownership announcement, Canada revealed it would retract its electric vehicle mandates that aimed for 60 percent of new cars to be electric by 2030. Instead, the government plans a five-year incentive program offering up to $5,000 for purchasers of electric vehicles.
Union Perspectives
- Unifor, the union representing workers at the Windsor factory, expressed optimism about continuing negotiations with LG Energy Solution.
- Local 444 members are assured continued employment under their existing collective agreement, which is set to expire in July.
- The union also expects Stellantis to meet what they term outstanding obligations regarding its idled Brampton Assembly Plant.
This transition signifies a pivotal moment for battery production in Canada and reflects the evolving landscape of the automotive industry as it shifts towards a more electrified future.
