ONTARIO: Stellantis NV is discussing options for building electric vehicles (EVs) in Canada with its Chinese partner, Zhejiang Leapmotor Technology Co, according to people familiar with the matter, a sign of how quickly the auto industry is being reshaped after Canada opened the door to companies from the world’s largest car market.
The talks are in an early stage, said the people, who asked not to be identified discussing information that’s not public.
If the companies proceed, it would be the first major Chinese auto investment in Canada since Prime Minister Mark Carney reached an agreement with President Xi Jinping in January to reduce tariffs on Chinese-made EVs.
As part of that deal, Carney’s government said it wanted to attract new Chinese joint-venture (JV) investment “with trusted partners” in the Canadian auto sector within three years.
But the potential for Chinese-led vehicle production in one of the United States’ closest allies and trading partners shows the ripple effects of US President Donald Trump’s tariffs on foreign-made cars and trucks, which have disrupted the integrated North American auto sector and cost automakers billions of dollars.
Officials in the US administration have repeatedly warned Carney about the risk of retaliation if Canada is used as a back door to export Chinese vehicles into the United States.
In January, Trump threatened to put 100% tariffs on all Canadian goods “if Canada makes a deal with China”.
The Canadian discussions are focused on an idled Stellantis assembly plant in Brampton, Ontario, a suburb of Toronto.
Thousands of workers there have been laid off for years, but were supposed to get a new Jeep sport utility vehicle (SUV) to produce.
Last year, after Trump announced tariffs, Stellantis cancelled those plans and moved the SUV to a US factory instead.
The decision prompted fury from Carney’s government, which threatened to claw back millions of dollars of taxpayer-backed subsidies from Stellantis.
The company has since been in discussions with Canadian Industry Minister Melanie Joly over future plans for the plant.
Those talks now include the possibility of building cars in partnership with Leapmotor, a fast-growing Chinese manufacturer.
Stellantis bought a 20% stake in Leapmotor in 2023, and a year later the two companies formed a JV called Leapmotor International, focused on the global production and sale of EVs.
In a statement, Joly confirmed the government and the company are engaged in discussions.
“Any new auto investments will prioritise Canada’s supply chain, including Canadian labour and parts suppliers,” the minister’s office said, without mentioning Leapmotor or any Chinese companies.
The JV plans to start producing Leapmotor electric SUVs later this year at a Stellantis factory in Spain, near a massive battery factory Stellantis is building with another Chinese firm, Contemporary Amperex Technology Co.
Other parts for the car will be made by yet another JV, called Lieder Automotive, between Spanish and Chinese firms.
Leapmotor and Stellantis also plan to produce EVs in Brazil and Malaysia, but those projects will rely, at least at first, on the use of “knockdown kits” where the cars are largely built in China and then shipped overseas for final assembly.
It’s unclear at this point what conditions might be placed on any Leapmotor-Stellantis venture in Canada, according to people with knowledge of the discussions, who said the talks are still preliminary and no decisions have been made.
Carney’s government would face delicate negotiations with labour unions and parts suppliers that are wary of Chinese firms entering the Canadian auto sector.
Asked at an event on Wednesday about the talks, Joly said Stellantis has been presenting “different scenarios”, but the government’s conditions include good jobs with strong labour standards, secure software and local parts “because the auto parts industry in Canada is as important as the assembly sector”.
She highlighted three key Canadian parts companies: Linamar Corp, Martinrea International Inc and Magna International Inc.
“They can thrive around the world if they’re strong back home, and they account for 200,000 jobs in the country,” she further noted.
“There needs to be localisation – it is fundamental.”
A Stellantis spokeswoman stressed all options are still on the table for Brampton and it’s still very early in the process.
“Stellantis remains focused on a strong Canadian footprint and is actively evaluating future programmes for Brampton, with the objective to ensure that any investment decision is sustainable and a long-term commitment that supports workers and suppliers,” LouAnn Gosselin, North America spokesperson for Stellantis, said in an emailed statement.
“We are in active discussions with government officials and key stakeholders to ensure that the conditions for success are in place to support continued investment in Canada,” Gosselin added. — Bloomberg
