South Korea’s LG Energy Solution is set to take over complete ownership of NextStar Energy from Stellantis, the automotive manufacturer. NextStar Energy was a joint venture established in 2022 between the two companies to construct Canada’s first large-scale battery production facility in Windsor, Ontario. The initial plan to focus on battery production for the automotive sector shifted in November when the decision was made to prioritize manufacturing batteries for power grid storage systems.
Stellantis disclosed that it would be divesting its 49% equity share in NextStar to LG Energy Solution in a statement released on Friday morning. The transaction, involving a nominal fee, is expected to bring undisclosed favorable benefits to Stellantis, subject to regulatory approvals. Stellantis affirmed its commitment to remain a key customer of NextStar and continue sourcing battery products from the facility.
Currently, approximately 1,300 individuals are employed at the Windsor plant, with a target of reaching 2,500 employees in the long run. The Canadian federal government previously pledged up to $10 billion in production subsidies to NextStar Energy, with an additional $5 billion contribution from the provincial government. NextStar’s CEO, Danies Lee, highlighted that the new ownership arrangement reinforces Canada’s standing in battery manufacturing and ensures ongoing investments in the Canadian workforce and manufacturing capabilities, leading to sustained economic advantages for Canada and Ontario.
The ownership transition is not anticipated to result in any workforce reductions at the plant, according to statements from Jennifer Cunliffe, a spokesperson for the office of Vic Fedeli, Ontario’s Minister of Economic Development, Job Creation, and Trade. Ontario Premier Doug Ford and federal industry minister Melanie Joly voiced support for the acquisition, emphasizing its positive implications for Canada’s automotive sector.
Following the ownership transfer, Stellantis witnessed a significant decline in its Milan-listed shares, dropping by as much as 25% on Friday. Stellantis CEO Antonio Filosa expressed optimism about the decision, emphasizing its strategic importance for securing battery supplies for the company’s electric vehicles and supporting its global electrification strategy.
The announcement of LG Energy Solution acquiring full ownership of NextStar coincided with Canada’s decision to eliminate electric vehicle (EV) mandates in favor of EV incentives. The move aims to boost EV adoption by offering incentives of up to $5,000 for individuals and businesses purchasing electric vehicles.
In response, the union representing workers at the Windsor factory welcomed the ownership change and expressed readiness to continue negotiations with LG. Unifor highlighted LG’s adaptability in responding to market changes and assured that workers at NextStar would retain their jobs under the current collective agreement. The union also urged Stellantis to fulfill its obligations to workers at the Brampton Assembly Plant.
Overall, the acquisition by LG Energy Solution marks a strategic move to bolster Canada’s position in battery manufacturing and signals a shift in focus towards sustainable energy solutions in the automotive industry.
