LG Energy Solution will convert NextStar Energy, a company it created in Canada in a joint venture with U.S. automaker Stellantis, into a wholly owned subsidiary. After liquidating the joint venture and shifting to a standalone entity, the company plans to develop it as a forward base to seize the North American energy storage system (ESS) market.
On the 6th, LG Energy Solution said it would acquire a 49% equity stake in NextStar Energy from Stellantis. Stellantis has invested about $980 million (about 1.44 trillion won) in the company, but LG Energy Solution bought Stellantis' stake for just $100.
In 2022, LG Energy Solution joined hands with Stellantis to establish a joint venture in Canada. At the time, as automakers shifted to electric vehicle production, demand for EV batteries was surging. Not only LG Energy Solution but also Samsung SDI and SK On established joint ventures with automakers in North America to build production facilities.
As the electric vehicle chasm (temporary demand stagnation) lengthens, automakers have recently been changing their production strategies by slowing or halting EV development. Ford halted production of its F-150 Lightning electric pickup and scrapped next-generation EV development entirely. In line with this, SK On ended the joint venture structure of BlueOval SK, its joint venture with Ford, late last year.
Stellantis, which is struggling as EV profitability deteriorates, also found it burdensome to operate the joint venture plant. Stellantis likewise in September removed the electrified Gladiator from the Jeep lineup and canceled plans to produce an electric pickup, among other steps to reduce EV production..
LG Energy Solution says it benefits because most of the lines can be used for ESS. NextStar Energy has already been producing ESS batteries since Nov. LG Energy Solution's acquisition of this equity stake gives it three ESS production hubs in North America, following its Holland, Michigan, and Lansing, Michigan, plants.
It may also receive investment subsidies from the Canadian government and production subsidies equivalent to the U.S. Advanced Manufacturing Production tax credit (AMPC) on a standalone basis. An LG Energy Solution official said, "By leveraging the existing facilities, we have been able to increase investment efficiency while securing financial soundness at the same time," and added, "It is also advantageous for securing differentiated competitiveness of the products produced and improving profitability."
Meanwhile, Stellantis said that even after selling its equity stake, it will continue to receive the electric vehicle batteries originally planned from the Canadian plant.