Jon Liedtke joined The Gene Valaitis Show on Niagara’s 610 CKTB to discuss the controversial divestment by Stellantis from the NextStar Energy battery plant in Windsor, Ontario.
During the segment, Liedtke and Valaitis explored several critical points regarding the state of the Canadian automotive industry:
The Chinese EV Threat: They discussed the entry of inexpensive Chinese EVs into the Canadian market, noting that while they offer advanced technology like integrated drones and “hot” designs, they raise severe national security concerns and labor issues due to the use of slave labor in China.
The “$100” Stake Sale: Stellantis liquidated its 49% stake in the brand-new $6 billion joint venture for a mere $100, despite having already invested $1 billion in “cold hard cash” into the project.
Corporate Retreat vs. Pivot: While local investment agencies characterized the move as a “strategic pivot” for operational certainty, Liedtke argued it was a “corporate withdrawal” intended to escape future liabilities and debt.
A National Pattern: Liedtke noted that Stellantis is reportedly pursuing a similar strategy in Indiana with its Samsung StarPlus venture, indicating a broader move away from direct ownership of battery manufacturing.
The Subsidy Shift: The discussion highlighted how the EV transition has faltered as government subsidies have changed, specifically noting the loss of the Biden-era subsidies following political shifts in the United States.
Industry in Decline: Valaitis pointed out that Ontario’s conventional car production has plummeted from 3.5 million units annually to 1.5 million, leading to significant layoffs in hubs like Oshawa.
Transcript (Generated by Gemini):
Gene Valaitis: Our good friend Jon Liedtke joins us once again today. Good morning.
Jon Liedtke: Good morning, Gene. How are you doing?
Gene Valaitis: I’m doing very well. You contacted me yesterday; I was unaware of this. It’s another blow to our car industry which stretches from Windsor to Oshawa, Ontario, including St. Catharines. Now Stellantis is selling its stake in a six billion dollar battery plant and they are trying to make out like this is a good thing. I don’t understand this at all. Explain it to me like I’m twelve.
Jon Liedtke: Our local Invest WindsorEssex is trying to spin this and tell us that the lead partner liquidating a forty-nine percent stake of a brand new six billion dollar joint venture for a hundred dollars—after they invested a billion dollars of cold hard cash into it—is actually good news for operational certainty. Give me a break. Let’s talk about the math they don’t want to mention. Stellantis isn’t just restructuring their stake; they’re cutting and running because of future liabilities. Reportedly, they are going to be doing the same thing in Indiana with their joint venture with Samsung, StarPlus, which is valued at roughly the same amount, only in American dollars, so it is far more. Think about this, Gene: If you bought a house for a million dollars and sold it to a friend for a hundred dollars a year later, the bank wouldn’t call that a strategic pivot. They’d call the fraud department.
Gene Valaitis: They’d call you stupid.
Jon Liedtke: That too. We’ve spent billions of dollars here of taxpayer promises to act as the lender of last resort for these companies that are now fleeing the scene due to a lack of government stimulus and a changing market. This proves the opponents of stimulus right again. I don’t see this as a strategic pivot whatsoever. I see this as a corporate withdrawal, no matter what spin is being told.
Gene Valaitis: Well, when the former Prime Minister was in power, he said Ontario would lead the world in the production of electric vehicles. He said we’d be making half a million a year. Everyone is running away. The battery plants are closed. In conventional cars here in Ontario, we used to make 3.5 million; last year we made 1.5 million. This industry is falling apart and it is affecting Ontarians from Windsor to Oshawa. Look at the people who got laid off in Oshawa two weeks ago when a shift closed down. We have to do something to preserve this industry. It’s the core of the Ontario economy, but nobody seems to be doing anything.
Jon Liedtke: The EV transition made sense when the subsidies were there. It was pushing market demand and producers were on board. But we tied our subsidies to America, and once Kamala Harris lost, the Biden subsidies disappeared under Trump. We’ve changed our strategy here. We’ve got a new Prime Minister and we’re looking at an industry that wants to continue to use oil right now. We have a lot of oil, but also resources for the EV transition. It made sense at the time, but right now things have changed. I don’t know how to keep supporting it because throwing money continually doesn’t seem to be the answer. Something here needs to be done. From Stellantis’ sake, it makes sense. It’s a smart escape. They’re paying a hundred dollars to get out of future debt and other liabilities. They’ll remain a customer of the plant without the headache of owning it. It’s a surgical strike to save their balance sheet. But we have to be real about what it is: they’re walking away from a billion dollars of investment and roughly three billion dollars of assets. You don’t do that if things are going well.
Gene Valaitis: The whole thing about EVs started with the climate change movement under the previous government. Everybody got into hysterics that we had to do this. Away from broadcasting, I try to be entrepreneurial and have multiple sources of income. If somebody shows me an opportunity, the first thing I ask is: Is there a market for this product? It’s a simple question. If somebody wants me to sell widgets, I’ll do market research. It appears the way this industry has collapsed, and the fact that people haven’t bought EVs, is because nobody asked that simple question.
Jon Liedtke: I think the market is there, but it’s unattainable for many people right now. The average person is having a hard time putting gasoline in their car. Twenty dollars gets you less and less every day. Electric vehicles are far more expensive than internal combustion engine vehicles, so they are out of reach. The Chinese models looking to enter the market are really cheap. Even if they are tariffed at one hundred percent, doubling the price, some are coming off the line at seven to ten thousand dollars US. Twenty thousand dollars for a brand new luxury car is dirt cheap. Our auto industry has to figure out automation, but the flip side is that while the price comes down, you get rid of jobs. That’s the opposite of what we want to achieve. I’m a proponent of letting the market do what it will, but I don’t want to see massive job losses. There is a need for intervention, but throwing buckets of cash doesn’t seem to be working.
Gene Valaitis: In the middle of this mess, the government announced three days ago that it’s going to spend eighty million dollars on eight thousand recharging stations because people have range anxiety. Then the Industry Minister, Joly, said she can see the Chinese building EVs in Ontario. Minister, we have unions here and they have slave labor in China. That’s why their cars are so inexpensive. The water’s bad in Ottawa, if you know what I mean.
Jon Liedtke: I laughed at that story about building Chinese EVs in Canada. I spoke with industry expert Markham Hislop, who said there is some precedent as other Asian brands build here. But I agree with you; I don’t see them wanting to increase the price of their EVs when they have cheap labor or full automation. Our unions won’t be happy with fully automated plants taking future jobs away.
Gene Valaitis: One thing worries me. Doug Ford calls the incoming cars “spy vehicles,” and they may be, but so is TikTok. I have seen presentation videos of two different Chinese EV models coming into Canada. Jon, I have to tell you, they are way cool. They’re hot.
Jon Liedtke: They’re gorgeous vehicles. They are tech-first; your phone is integrated and the car becomes part of your social environment. The features are there. I’ve seen vehicles with built-in PlayStations and big screen TVs. I saw one where the roof panel retracted and a drone came out. The drone followed the car as you drove, or you could fly it away while the kids in the back seat controlled it. The flip side is the national security point of view. We’re putting drones in cars—do we know if the drone starts flying off to take pictures or videos on its own? There are lots of concerns to look at before we flood the market. They’re not just cars.
Gene Valaitis: You’re right. Thanks for pointing this out to me and for jumping on this morning.
Jon Liedtke: Always, Gene. I look forward to chatting next week.
Gene Valaitis: Sure will. On Tuesday. There he goes, Jon Liedtke. He called me yesterday afternoon and said I wouldn’t believe what’s happening. I didn’t, and it is. Our car industry is going down the drain.
This aired on 610 CKTB
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