LG takes full control of Canada's largest battery plant

The joint venture that established Canada's first commercial-scale battery manufacturing facility is being unwound. LG Energy Solution announced it will acquire Stellantis's 49% equity stake in NextStar Energy, assuming complete ownership of the Windsor, Ontario plant that the two companies established in 2022.

The restructuring reflects a recalibration of priorities. For LG Energy Solution, the move consolidates control over a strategic manufacturing asset at a time when battery demand is fragmenting across multiple sectors. For Stellantis, it represents a retreat from direct ownership whilst maintaining access to the production capacity it requires for its electrification programmes.

The decision was reached through mutual agreement between the two shareholders, following what both parties describe as extensive consultation with NextStar Energy's leadership. The transaction remains subject to regulatory approvals and other unspecified conditions.

Manufacturing capacity realigned for broader industrial applications

Under sole ownership, NextStar Energy will pivot towards serving a more diverse customer base. The facility, which was originally conceived to supply Stellantis's electric vehicle programmes, will now target the energy storage system industry alongside automotive clients. This shift mirrors a broader trend amongst battery manufacturers who are hedging against volatility in the automotive sector by pursuing applications in grid storage, maritime, robotics and emerging mobility platforms.

David Kim, chief executive officer of LG Energy Solution, framed the acquisition as a response to market dynamics. "LG Energy Solution sees growth opportunities in North America by situating a key production hub in Canada. Full ownership of NextStar Energy will enable us to respond swiftly to the growing demand from the ESS market and position us to play a key role in Canada's EV industry by securing additional North American-based customers."

The Windsor facility has absorbed more than $5 billion CAD ($3.7 billion) in investment to date. It currently employs over 1,300 workers, with a long-term target of 2,500 employees as production scales to full capacity. The plant represents Canada's only commercial-scale battery manufacturing operation, positioning it as a cornerstone of the country's attempts to establish a domestic cell production capability.

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Stellantis maintains supply relationship despite ownership exit

Antonio Filosa, chief executive officer of Stellantis, emphasised continuity despite the ownership transition. "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. This is a smart, strategic step that supports our customers, our Canadian operations, and our global electrification roadmap."

The statement suggests Stellantis has negotiated long-term supply agreements that preserve its access to NextStar's production even as it relinquishes equity. This arrangement allows the automotive manufacturer to offload the capital intensity and operational complexity of battery production whilst retaining the supply chain security it needs for its North American assembly operations.

The timing of the exit is noteworthy. Stellantis, like other legacy automotive manufacturers, faces mounting pressure to manage capital allocation as electric vehicle adoption rates remain uncertain and regulatory frameworks continue to shift. Divesting from direct battery manufacturing ownership whilst maintaining supply relationships offers a middle path between vertical integration and complete reliance on third-party suppliers.

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North American battery manufacturing landscape enters new phase

Upon completion of the acquisition, LG Energy Solution will operate four standalone facilities in North America alongside four joint venture operations. The company describes itself as the largest battery manufacturer in the region, with what it characterises as the most diverse production footprint spanning multiple chemistries, formats and applications.

The strategic repositioning extends beyond the NextStar transaction. LG Energy Solution has announced plans to reallocate production capacity between electric vehicle and energy storage system applications across its global manufacturing network. The objective is to minimise new capital expenditure whilst maximising utilisation of existing production lines.

This approach reflects broader uncertainty in the battery manufacturing sector. Demand forecasts for electric vehicles have been repeatedly revised downward across major markets, whilst energy storage system deployment has accelerated faster than many analysts anticipated. Battery manufacturers are responding by building flexibility into their production systems, enabling rapid shifts between different applications as market conditions evolve.

LG Energy Solution has set a target of increasing global energy storage system production capacity to over 60 GWh this year, with more than 50 GWh of that capacity concentrated in North America. The company is reallocating capacity rather than building new facilities, a strategy that suggests caution about overextending in an environment where demand patterns remain fluid.

Danies Lee, chief executive officer of NextStar Energy, positioned the ownership change as reinforcing Canada's manufacturing competitiveness. "This new ownership structure strengthens Canada's position as a leader in battery manufacturing. 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 restructuring of NextStar Energy offers a case study in how the North American battery manufacturing landscape is maturing. Initial investments were predicated on assumptions about rapid electric vehicle adoption and tightly integrated supply chains. As those assumptions have been tested by market realities, manufacturers are adapting their ownership structures and production strategies accordingly. The shift from joint ventures to sole ownership, combined with the pivot towards diversified applications, suggests an industry recalibrating for a more complex and uncertain future than originally anticipated.