Canada Blocks Leapmotor Assembly at Stellantis, Aims to Recover Subsidies
Canada’s Industry Minister, Mélanie Joly, has established three essential conditions for any future production plans at Stellantis’s Brampton plant. These conditions aim to counter proposals for assembling vehicles using parts shipped from China, specifically those by the electric vehicle manufacturer Leapmotor. Stellantis holds a significant stake in Leapmotor and aims to produce vehicles outside China through a joint venture.
Stellantis and Leapmotor Assembly Proposal
The Minister’s remarks, made in Vancouver, did not explicitly mention Leapmotor but delineated clear requirements. Any new production plan must maintain or exceed previous labor standards, support the Canadian auto parts supply chain, and comply with the Canada-United States-Mexico Agreement (CUSMA) concerning vehicle software.
Minister Joly’s Stance
“We can’t bring cars in a kit to Canada,” Joly asserted, emphasizing the importance of the domestic auto parts sector, which employs around 200,000 workers. She called on Stellantis to resume production at Brampton, claiming that the federal government finds the cessation of operations “completely unacceptable.” Joly stated that taxpayers could recover funds unless production is reinstated, highlighting that Stellantis received up to $529 million in federal subsidies for retooling the plant.
The Three Conditions
- Labor Standards: Any production arrangement must meet or exceed previously established working conditions.
- Supply Chain Participation: The use of Canadian parts suppliers is mandatory, eliminating the option for assembling imported kits.
- Software Security: Vehicle software must adhere to CUSMA regulations to avoid issues with Chinese-origin software.
These conditions align with opinions voiced by Unifor, automotive industry leaders, and Ontario Premier Doug Ford, all of whom have criticized the Leapmotor assembly approach, asserting it does not contribute significantly to job creation in Canada.
Current Status at Brampton Plant
The Brampton facility remains inactive since Stellantis paused retooling efforts in February 2025. As a result, approximately 3,000 workers represented by Unifor are currently on furlough. Stellantis has instead directed plans for the next-generation Jeep Compass to its Belvidere, Illinois plant, anticipated to commence production in late 2027.
In response to potential talks of Leapmotor’s assembly models, Stellantis has not confirmed nor denied these discussions. The company stated their commitment to maintaining a robust presence in Canada and exploring sustainable production programs for the Brampton site.
Context of the Dispute
This situation highlights Canada’s delicate trade relations with China. Earlier in the year, Canada agreed to significantly reduce tariffs on Chinese-made electric vehicles, aimed at attracting joint ventures. Joly reaffirmed that the quota for importing 49,000 electric vehicles from China would proceed as planned, distinguishing those agreements from the Brampton assembly situation.
Implications for the Canadian Auto Sector
The Canadian auto industry, which supports over 500,000 jobs, has seen production decline nearly 50% since 2016, now standing at approximately 1.2 million vehicles annually. With over 90% of these vehicles exported to the United States, they face substantial tariffs on non-US components.
As the dispute between Stellantis and the Canadian government continues, the focus remains on revitalizing production at the idle Brampton plant, ensuring the future of local workers and the Canadian automotive sector overall.
