South Korea’s LG Energy Solution is set to take over full control of NextStar Energy from Stellantis, an automaker. NextStar Energy, a collaboration between the two companies established in 2022, aimed to construct Canada’s inaugural large-scale battery production site in Windsor, Ontario. Recent developments indicate a shift in focus, with batteries from the plant now intended for power grid storage systems rather than exclusively for the automotive sector, as initially planned.
Stellantis disclosed its decision to divest its 49% equity interest in NextStar to LG Energy Solution in a statement released on Friday morning. The sale was executed for a nominal fee in exchange for undisclosed favorable benefits, subject to certain conditions and approvals. Stellantis affirmed its commitment as a loyal customer, continuing to procure battery products from NextStar.
The Windsor facility currently employs approximately 1,300 individuals, with a target of expanding the workforce to 2,500 over time. The federal government has pledged up to $10 billion in production subsidies to NextStar Energy, complemented by an additional $5 billion from the provincial government. NextStar’s CEO, Danies Lee, hailed the new ownership arrangement as fortifying Canada’s standing in battery manufacturing, ensuring ongoing investments in the local workforce and manufacturing capabilities to deliver sustained economic advantages.
The transition of ownership is not anticipated to result in any job losses at the factory, according to Jennifer Cunliffe, a spokesperson for Ontario’s Minister of Economic Development, Job Creation, and Trade, Vic Fedeli. Ontario Premier Doug Ford and federal industry minister Melanie Joly expressed positive views on Stellantis’ decision to divest its stake to LG Energy Solution, highlighting the potential benefits for Canada’s economic landscape.
Stellantis faced a significant stock price decline following the announcement of downsizing its electric vehicle initiatives, reflecting broader challenges in aligning with evolving industry trends. Political figures and industry stakeholders have called for supportive measures to bolster Canada’s automotive sector amidst shifting market dynamics, emphasizing the importance of strategic investments and collaborative ventures.
The news of the ownership transfer coincides with Canada’s revision of its electric vehicle mandates, opting for incentives over mandatory targets to spur adoption. Windsor Mayor Drew Dilkens lauded LG’s role as a pivotal player in the region’s manufacturing ecosystem, foreseeing substantial economic gains and enhanced resilience as a result of the ownership transition.
Union representatives expressed optimism about continuing negotiations with LG at the Windsor plant, praising the company’s adaptability in navigating market changes. Unifor emphasized the importance of honoring labor agreements and urged Stellantis to fulfill obligations to workers at its Brampton Assembly Plant. The move is seen as a strategic realignment for both LG and Stellantis, positioning them for future growth in the evolving automotive landscape.
