Canada Moves To Declare Stellantis In Default On Funding Deal

Canada’s federal government is escalating its standoff with Stellantis after the automaker shifted planned Jeep® Compass (J4U) production from Brampton, Ontario, to a U.S. plant in Illinois. Ottawa says that decision breaches contracts tied to taxpayer-funded incentives — and it’s taking action.

Industry Minister Mélanie Joly told lawmakers that Canada is formally putting Stellantis on notice.

“Today, on Dec. 4, I’m formally announcing that we’re serving Stellantis with a notice of default under the contracts,” Joly said during testimony before a parliamentary committee.

More than $500 million (or about $358 million USD) in public funds has been committed since the merger that formed Stellantis, supporting capital upgrades at both the Brampton and Windsor assembly plants. The government says those deals were tied to strong job guarantees — especially at Brampton, where around 3,000 workers are currently laid off.

Joly emphasized that Canada will not stand down as domestic production and workers are put at risk.

“When it comes to protecting auto jobs, we’ll not let these industries down,” she said. “We’ll stand firm for the sake of our workers, our industries, and our nation because defending these jobs means defending Canada’s economic backbone and the livelihoods of countless families.”

How We Got Here – 

Stellantis originally planned to build the next-generation Jeep Compass in Brampton as part of a retooling effort. But after U.S. tariffs reshuffled manufacturing costs, the company announced in October it would shift that production to Illinois — alongside a new $13 billion U.S. investment over four years aimed at offsetting those tariff pressures.

Canada immediately triggered a 30-day dispute resolution process, which has now escalated to this default notice.

Meanwhile, Stellantis maintains that the Brampton plant has not been shuttered — only temporarily paused while it evaluates future product allocations.

Stellantis representative Teresa Piruzza, addressing lawmakers in a separate hearing, pushed back strongly.

“We do not agree that we are in breach of contract,” Piruzza said. She added the site is “on an operational pause,” as Stellantis continues to “review the operations at that plant in terms of what the plan is for production moving forward.”

Piruzza also pointed to Stellantis adding a third shift at Windsor Assembly — set to create up to 1,500 jobs early next year — as proof the company remains committed to Canada.

Billions At Stake –

Complicating matters further is the massive NextStar Energy EV battery plant in Windsor — a joint venture with LG Energy Solution expected to receive billions in federal production subsidies. That funding is also tied to job creation across Ontario’s auto corridor, including Brampton.

With Canada still recovering from economic shocks and eager to keep manufacturing jobs at home, this dispute is more than a contract fight — it’s a political one. The stakes include national employment, future EV development, and whether taxpayer dollars are protected when multinational companies shift strategies.

For now, Stellantis isn’t backing down. And neither is Ottawa. More legal and political sparring appears inevitable as both sides work behind closed doors to shape the future of Canadian auto manufacturing.

Source: Bloomberg and This Guy’s Garage YouTube channel