South Korea’s LG Energy Solution is set to take over complete ownership of NextStar Energy from Stellantis, an automaker. NextStar, a collaboration between the two firms established in 2022, aimed to construct Canada’s inaugural large-scale battery production facility in Windsor, Ontario. An adjustment in plans was declared in November, shifting the focus of the plant’s battery production towards power grid storage systems rather than its initial emphasis on the automotive sector.
Stellantis confirmed the sale of its 49% equity share in NextStar to LG Energy Solution in a statement released on Friday morning. The automaker mentioned that the sale was made for a token fee in exchange for undisclosed beneficial terms. The transaction is contingent on certain conditions and approvals, as per the company’s announcement.
Stellantis committed to remaining a loyal customer, continuing to procure battery products from NextStar. Presently, approximately 1,300 individuals are employed at the Windsor facility, with a target of reaching 2,500 long-term employees. The Canadian federal government had previously pledged up to $10 billion in production subsidies to NextStar Energy, with an additional $5 billion contributed by the provincial government.
Danies Lee, the CEO of NextStar, stated, “This new ownership arrangement strengthens Canada’s standing as a frontrunner in battery manufacturing, ensuring ongoing investments in our Canadian workforce and manufacturing capabilities, while delivering sustained economic advantages for Canada and Ontario.” Ontario officials assured that Stellantis’ divestment would not lead to any workforce reductions at the plant.
The Ontario Premier and federal industry minister both expressed approval of Stellantis’ decision to sell its stake. The ownership transition was viewed positively as a move that reinforces Canada’s manufacturing sector. The day also saw Stellantis scaling back its electric vehicle initiatives, impacting its stock performance due to industry shifts.
The Conservative MP raised concerns about potential discrepancies between Canadian vehicle manufacturers and government policies. Calls were made to reduce taxes on domestically manufactured vehicles and eliminate carbon taxes on auto companies to enhance affordability. Windsor’s mayor lauded LG’s role in the region’s manufacturing ecosystem, anticipating continued economic benefits.
Stellantis acknowledged the implications of LG’s full utilization of the Windsor facility’s capacity, securing the battery supply for its electric vehicles. The company stated the strategic significance of the move in supporting its global electrification objectives. The announcement coincided with Canada’s decision to eliminate EV mandates and reintroduce incentives for electric vehicle purchases.
The union representing workers at the Windsor plant expressed readiness to engage in negotiations with LG, praising the company’s adaptability in a changing market. While workers at NextStar are assured of job security under the current collective agreement, the union urged Stellantis to fulfill obligations to workers at its Brampton Assembly Plant. LG’s acquisition was seen as a move to expand business opportunities, potentially attracting new customers and technologies to the facility. Stellantis was noted to benefit from the deal by refocusing on its core operations.
