Canada threatens Stellantis lawsuit over EV funding after US production shift

Canada has issued Stellantis a formal default notice, alleging breaches of a government EV funding agreement after production plans shifted to the United States. Industry Minister Mélanie Joly said the automaker has 30 days to address the issues or face legal action. The dispute involves CAD 529 million in support and Brampton job losses.

Canada’s federal government threatened legal action against Stellantis after the automaker moved planned vehicle production to the United States and agreed to sell its Brampton, Ontario, assembly plant. Industry Minister Mélanie Joly said Ottawa was seeking to recover hundreds of millions of dollars in public funding linked to the project. The dispute unfolded amid President Donald Trumps trade war and tariff pressure.

Joly said Ottawa issued Stellantis a formal notice that alleged breaches of a funding agreement. The notice gave the company 30 days to address the claimed violations. “We sent a notice of default and, basically, they have 30 days or else. Of course, we’ll sue them,\” Joly told reporters in Toronto. Joly added Stellantis faced liability for \”hundreds of millions of dollars\”.

Stellantis funding agreement and Canada auto industry pressure

Trump’s tariffs increased strain on Canada’s auto industry, which is closely linked to US supply chains. Trump repeatedly urged automakers to shift work to the United States. In 2022, Canada committed up to 529 million Canadian dollars (USD 380 million). The funding aimed to help Stellantis retool the Brampton and Windsor plants for electric vehicle production.

Stellantis, the world’s fourth-largest carmaker, dropped plans to build the Jeep Compass in Brampton. Production was moved to Illinois, leaving more than 2,000 Canadian workers without jobs. Prime Minister Mark Carney said the company had betrayed Canadian workers. Carney added the sale would not meet Stellantis’ obligations under its commitments.

Brampton plant sale and Stellantis meeting with governments

Stellantis said on Monday it agreed to sell the Brampton plant to Roshel, a Canadian armoured vehicle manufacturer. The automaker said it offered to repay government funding received for the Brampton work. Stellantis did not reveal the amount involved. A message left for a Stellantis spokesperson was not immediately returned.

Joly said federal and Ontario officials planned to meet Stellantis’ global chief executive. Unifor President Lana Payne said a meeting on Thursday with Stellantis, the union and both governments brought no solution. \”The time to stop that was last week, the week before and the week before that,\” Payne said. \”Now we’re going to a different situation. We can’t stop the sale. The sale has occurred, so we would have to reverse it, which is doubly difficult, obviously.\”

Autos are Canada’s second-largest export, and Mark Carney said the sector is a major employer. Carney said it supports 125,000 Canadians directly and almost another 500,000 in related industries. The dispute now centres on whether Stellantis met the terms tied to public funding. Ottawa said the 30-day period would guide its next steps.

With inputs from PTI