Stellantis, the world's fourth-largest automotive group, is negotiating cooperation with Leapmotor to build cars and revitalize an idle factory in Canada.

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Leapmotor electric vehicles may enter the North American market.

On April 1st, according to Bloomberg citing informed sources, Stellantis, the world’s fourth largest automotive group, is exploring the possibility of manufacturing electric vehicles in Canada with China’s Leapmotor.

Negotiations are currently focused on a dormant vehicle assembly plant owned by Stellantis in Brampton, Ontario, Canada, with both parties studying joint venture production of Leapmotor brand electric vehicles at the plant.

If an agreement is reached, this will be the first major Chinese automotive joint venture investment in Canada since Canada reduced tariffs on Chinese electric vehicles. Earlier, at the end of February, according to Xinhua News Agency, to implement the important consensus reached by leaders of China and Canada, both sides made specific arrangements to properly address trade issues concerning electric vehicles, steel and aluminum products, agricultural and aquatic products, among others.

However, the report believes this potential deal faces pressure. Canadian labor unions and local parts suppliers are cautious about the cooperation, insisting on full local assembly processes.

Canada’s Minister of Industry Melanie Joly confirmed that the government is holding relevant consultations with Stellantis and 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 near Toronto and employs about 3,000 unionized workers.

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

This decision triggered strong dissatisfaction from the Canadian government, which threatened to reclaim millions in government subsidies previously granted to Stellantis. Subsequently, Stellantis and Canadian Industry Minister Joly have continued negotiations on the plant's future direction.

Sam Fiorani, Vice President of automotive industry forecasting firm AutoForecast, believes Stellantis originally considered producing future Chrysler products at Brampton, but that plan will likely move to Illinois. He said:

Stellantis will either partner with a company like Leapmotor to build cars at this plant, or sell the factory to an emerging manufacturer 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 sides established Leapmotor International, a joint venture focused on the global production and sales of electric vehicles.

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

In addition, the two sides plan to produce electric vehicles in Brazil and Malaysia, but these projects will initially rely on "knockdown kits," meaning that the main part of the vehicle is produced in China and shipped overseas for final assembly.

The report cites informed sources as saying it is unclear whether Stellantis’ negotiations can replicate this model. Talks are still in the early stages and no decisions have been made.

Concerns of Canadian Unions and Suppliers

According to the report, workers at the Brampton plant belong to Unifor Canada, which wants to revive Canada’s local supply chain. Lana Payne, National President of the union, stated:

Any knockdown kit assembly method would only employ very few workers, while replacing tens of thousands of jobs in vehicle assembly and auto parts manufacturing.

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

Flavio Volpe, President of the Automotive Parts Manufacturers’ Association of Canada, said that production at Brampton "must be full vehicle assembly using local suppliers, as has been the practice at this plant since 1962." Volpe said:

Knockdown kits may be suitable for Brazil, but for hundreds of Canadian auto parts suppliers waiting for the plant to restart, it is not the right approach.

Canadian Industry Minister Joly said at an event Wednesday night that the government’s conditions include high-quality jobs, strict labor standards, software security, and local parts procurement, specifically naming Linamar, Martinrea, and Magna as leading Canadian parts companies and stating that "localization is a fundamental requirement."

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