South Korean-based LG Energy Solution is acquiring full ownership of NextStar Energy from automaker Stellantis.
NextStar was a joint venture between the two companies that came about in 2022 to build Canada’s first large-scale battery manufacturing facility in Windsor, Ont.
In November, it was announced batteries made at the plant would now be prioritized for power grid storage systems and not primarily the automotive industry as originally promised.
Stellantis said it would be selling its 49 per cent equity stake in NextStar to LG Energy Solution in a Friday morning statement.
A spokesperson for the automaker says the stake was sold for a nominal fee in return for “undisclosed favorable benefits.” The deal is subject to conditions and other approvals, the company said.
Stellantis says it remains a “committed customer” and will continue to source battery products from NextStar.
To date, the companies say roughly 1,300 people are employed at the Windsor plant with a long-term goal of 2,500 having employees.
The federal government has previously pledged up to $10 billion in production subsidies to NextStar Energy. The other $5 billion is coming from the provincial government.
“This new ownership structure strengthens Canada’s position as a leader in battery manufacturing,” said Danies Lee, NextStar’s chief executive officer.
“It provides long-term certainty to continue investing in our Canadian workforce and our manufacturing capacity while delivering sustained economic benefits for Canada and Ontario.”
The province isn’t expecting layoffs because of Stellantis selling off its stake in the factory.
“This transfer in ownership will not lead to any job losses at the facility,” said Jennifer Cunliffe, a spokesperson for Vic Fedeli’s office. He’s Ontario’s Minister of Economic Development, Job Creation and Trade.
Ontario Premier Doug Ford called the decision by Stellantis is a good deal, while federal industry minister Melanie Joly also gave the news a thumbs up.
“I think it’s really good news, I think that it’s very welcome and it shows that LG is here for a long run,” she told reporters at a stop in Guelph, Ont., where she discussed Canada’s auto strategy, unveiled Thursday.
“[I’m] saying that we will invest in those who invest in us. What do I mean by that? We just signed a partnership with Korea on auto manufacturing last week. What are we seeing this week? LG is buying out Stellantis to invest more in Canada. Good news.”
Industry Minister Mélanie Joly said the federal government will recover ‘our money’ from Stellantis after spending more than $220 million to help the automaker upgrade its plants before it announced plans to move some production to the U.S.
The move comes on the same day Stellantis also announced a massive scale back of its electric vehicle ambitions, hammering its shares as automakers pay the price of misjudging the switch to cleaner driving.
Conservative MP and shadow labour minister Kyle Seeback hit on that change when asked about the news, calling it “significant.”
“It seems like the companies that manufacture vehicles in Canada are going in one direction and the Liberal government is going in another, and I don’t think that’s good for Canadian workers,” said Seeback.
He called for the government to remove the tax on Canadian-made vehicles and remove the industrial carbon tax on auto manufacturers to make the vehicles more affordable.
Windsor Mayor Drew Dilkens said the news solidifies LG’s place as a “cornerstone,” of the region’s manufacturing ecosystem.
“This announcement is a strong sign reinforcing the future LGES envisions through their local production facility,” the mayor said in a statement posted on social media.
“The ownership transition will support substantial and sustained economic benefits for Windsor-Essex and the surrounding region that generate long-term tax revenue, stimulate local business growth, and strengthen economic resilience.”
Stellantis’s Milan-listed shares plunged as much as 25 per cent on Friday, the lowest since Stellantis was created in early 2021 through the merger of Fiat Chrysler and Peugeot maker PSA.
“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,” Stellantis CEO Antonio Filosa said in a statement issued Friday.
“This is a smart, strategic step that supports our customers, our Canadian operations, and our global electrification roadmap.”
The news of the ownership change comes a day after Canada announced, among other things, that it is scrapping EV mandates that would require 60 per cent of all new cars to be electric by 2030 and 100 per cent by 2035.
Instead, EV incentives will make a return with a five-year program given people and businesses up to $5,000 when they buy one.
Union response
The union representing workers at the Windsor factory says it’s looking forward to continuing its bargaining relationship with LG.
In an online statement, Unifor says it commends LG for its “versatility in pivoting to maintain production in a changing marketplace.”
“Local 444 members at NextStar will continue to be employed under the terms of their collective agreement, which is set to expire in July of this year,” the union stated, while at the same time demanding Stellantis fulfil what it refers to as “outstanding obligations” to members at its idled Brampton Assembly Plant.
Unifor Local 444 President James Stewart thinks it’s an indication of how LG wants to broaden its horizons to grow business.
“Companies like Toyota and Honda and Ford … may not be interested in buying a product that’s got ownership by Stellantis,” Stewart told CBC News.
“This decoupling, I think, allows NextStar the opportunity to add more additional lines with new technologies in the facility that allows them to adapt for new customers.”
As for Stellantis, Stewart believes it allows the automaker to concentrate on its core business.
“They’ve had to pivot over the course of last year and a half. They’ve had to change their plans because of the market in North America.”
NextStar does not supply product directly to the Stellantis Windsor assembly plant, according to Stewart, so nothing changes for their current orders.
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