By Kwanwoo Jun and Paul Vieira
Jeep maker Stellantis has agreed to sell its entire 49% stake in a Canada battery joint venture to its South Korean partner, LG Energy Solution.
The companies said Friday that LG Energy Solution will acquire full ownership of NextStar Energy to better serve a broader customer base, including the energy storage system industry.
LG will buy Stellantis's stake for $100 on June 30, the battery maker said in a separate regulatory filing.
The value appears symbolic, given that LG had decided to invest $1.46 billion in the joint venture for a 51% stake, while Stellantis committed $980 million for the remaining share. LG said its investment is still under way. The sale comes as Stellantis said earlier Friday it would book charges of about $26 billion, related to bad bets on electric vehicles.
Stellantis's exit from the Windsor, Ontario joint venture follows on a decision last year by the car company to shift production of its Jeep Compass model from a factory in Brampton, Ontario--near Toronto--to Illinois. The Canadian government has threatened to sue Stellantis unless the two sides come to an agreement through a dispute-resolution process, in which the auto maker agrees to pay part of the hundreds of millions in financing Ottawa provided this decade to modernize its Canadian operations.
"Our decision to restructure the NextStar Energy joint venture was difficult, but it is a necessary step to position the gigafactory for long?term success, including the ability to pursue third-party business. This change does not diminish Stellantis's commitment to Canada," a spokeswoman for the car company said.
A spokeswoman for Canadian Industry Minister Melanie Joly was not immediately available for comment. The Premier of Ontario, Doug Ford, said he remains optimistic about the NextStar joint venture. "It was a good business decision, to be frank with you," Ford said of Stellantis's sale.
On Thursday, Canada unveiled a revamp of its auto strategy in a bid to loosen its ties with the big North American-based auto makers. It intends to do so by focusing on attracting investment from other non-U.S. car makers to build EVs.
Unifor, the Canadian union that represents automotive-assembly workers, said it commends LG Energy for stepping up and taking full control of NextStar, which may employ up to 2,500. The union also demanded that Stellantis live up to its obligations to keep production going at its Brampton factory.
A Stellantis spokeswoman said the company is evaluating future production plans for Brampton.
Stellantis and LG teamed up in 2022 to build Canada's first large-scale battery manufacturing facility in Windsor, Ontario, and more than 5 billion Canadian dollars, equivalent to $3.65 billion, has been invested in NextStar Energy so far, according to the companies' joint statement. In the summer of 2023, the Canadian and Ontario governments agreed to pony up an additional $11 billion in incentives to Stellantis and LG Energy after the companies halted construction to seek more financial help.
The planned ownership transition comes as global automakers like Stellantis are pulling back from electric-vehicle projects amid slowing demand in North America following the Trump administration's termination of U.S. tax credits for new EV purchases.
Global EV battery makers are adjusting production to reflect sluggish EV demand while diversifying and expanding their customer base beyond the automotive sector.
(END) Dow Jones Newswires
02-06-26 1541ET
