World's fourth-largest automaker Stellantis in talks with Leapmotor to produce cars, revitalizing idle Canadian factory

Leapmotor electric vehicles may enter the North American market.

On April 1, Bloomberg, citing people familiar with the matter, reported that Stellantis, the world's fourth-largest automotive group, is discussing the possibility of producing electric vehicles in Canada with Chinese automaker Leapmotor Technology.

Negotiations are currently focused on an idle vehicle assembly plant in Brampton, Ontario, Canada, owned by Stellantis. The two parties are exploring the possibility of producing Leapmotor-branded electric vehicles at the plant through a joint venture.

If the negotiations ultimately reach an agreement, this would become the first major Chinese automotive joint venture investment since Canada lowered electric vehicle tariffs on China. Previously, in late February, according to Xinhua News Agency, to implement the important consensus reached by the leaders of China and Canada, the two sides made specific arrangements to properly resolve economic and trade issues in areas such as electric vehicles, steel and aluminum products, and agricultural and aquatic products.

However, the report suggests the potential deal faces pressure. Canadian labor unions and local parts suppliers are reserved about the cooperation, insisting on full-process local assembly.

Canadian Industry Minister Melanie Joly confirmed that the government is in discussions with Stellantis and clearly stated that any new investment must prioritize the use of local supply chains and comply with labor standards. However, her statement did not mention Leapmotor or any Chinese company by name.

Stellantis' Idle Factory

The Brampton vehicle plant in Canada is located in the suburbs of Toronto and has about 3,000 unionized workers.

Previously, Stellantis had promised to produce a new Jeep SUV at this plant, and thousands of workers had been waiting for years for this. However, after Trump announced tariffs on foreign cars last year, Stellantis canceled the plan and moved the SUV production to a plant in the United States.

This decision provoked strong dissatisfaction from the Canadian government, which had threatened to claw back millions of Canadian dollars in government subsidies previously granted to Stellantis. Since then, Stellantis and Canadian Industry Minister Joly have continued negotiations on the future direction of the Brampton plant.

Sam Fiorani, vice president of automotive industry forecasting firm AutoForecast, believes that Stellantis had originally considered producing future Chrysler products at Brampton, but this plan is now likely to move to Illinois. He said:

Stellantis will either cooperate with companies like Leapmotor to produce vehicles at this plant, or sell the plant to emerging manufacturers from China. These are the two most likely outcomes.

Stellantis acquired a 20% stake in Leapmotor Technology in 2023, and a year later, the two parties established Leapmotor International, a joint venture company focused on global production and sales of electric vehicles.

Currently, Leapmotor International plans to start production of Leapmotor electric SUVs at a Stellantis plant in Spain later this year. This plant is adjacent to a large battery plant jointly built by Stellantis and CATL.

In addition, the two parties also plan to produce electric vehicles in Brazil and Malaysia. However, these two projects will initially rely on the "knockdown kits" model, meaning the main body of the vehicle will be produced in China and then shipped overseas for final assembly.

The report, citing sources familiar with the matter, states that it is still uncertain whether Stellantis' negotiations can replicate this model. The discussions are still in the early stages, and no decisions have been made yet.

Concerns from Canadian Unions and Suppliers

According to reports, Unifor, the union representing workers at the Brampton plant, wants to revitalize the local supply chain in Canada. Lana Payne, national president of Unifor, pointed out:

Any knockdown kit model will only employ a very small number of workers, while replacing tens of thousands of jobs in vehicle assembly and auto parts.

Lana Payne emphasized that the union "fully expects Stellantis to fulfill its commitments regarding products and jobs at the Brampton assembly plant."

Flavio Volpe, president of the Automotive Parts Manufacturers' Association of Canada, stated that any production in Brampton "must be full-process vehicle assembly using local suppliers, which has been the consistent practice at this plant since 1962." Volpe said:

Knockdown kits may be suitable for Brazil, but they are not suitable for the hundreds of Canadian auto parts suppliers waiting for the plant to restart.

Canadian Industry Minister Joly said at an event on Wednesday evening that the Carney government's conditions include high-quality jobs, strict labor standards, software security, and local parts procurement. She specifically named three leading Canadian parts manufacturers – Linamar, Martinrea, and Magna – stating that "localization is a fundamental requirement."