Stellantis Is in Default for Moving Jeep Production to U.S., Canada Says

The automaker switched production from Ontario in a bid to please President Trump. But the company defaulted on contracts covering hundreds of millions of dollars in assistance, Canada said.

Canada’s government formally told the global automaker Stellantis on Thursday that its transfer of the production of its Jeep Compass from a suburban Toronto plant to Illinois meant that the company had defaulted on contracts covering hundreds of millions of dollars in assistance.

“Stellantis is on the hook,” Mélanie Joly, the Canadian industry minister, told a parliamentary committee after announcing that the government had served the company with a “notice of default” on Thursday.

“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,” Ms. Joly added.

While the details of the notice were not made public, such documents typically demand that companies either make changes to comply with contracts or repay money they had received.

Stellantis, a European-based automaker that also produces vehicles under the Chrysler, Dodge and Ram brands in North America, said that it had made the decision to not finish a planned retooling of its factory in Brampton, Ontario, as part of a $13 billion strategy in response to President Trump’s demand that automakers return manufacturing back to the United States.

But the company had agreed to revamp the Brampton factory to make the Jeep Compass in exchange for Canadian government assistance in the form of forgivable loans.

Because Stellantis has not indicated what, if anything, will replace the sport utility vehicle, the futures of the Brampton factory and the jobs of about 3,000 employees are unclear.

If Stellantis had finished the retooling, which would have enabled the manufacturing of both gas- and electric-powered versions of the Compass, it would have received a total 529 million Canadian dollars, about $380 million, in assistance from the Canadian government. Testimony before the committee indicated that about 220 million Canadian dollars (a little over $157 million) had been paid to date.

Stellantis agreed on Thursday to share details of its contract with members of another parliamentary committee who previously had not had access to it, on the condition that it not be made public. So it was unclear if all the money or only a portion of it was tied to keeping the Brampton factory open.

In her testimony, Ms. Joly said that any money for the construction of a new battery plant by Stellantis and LG Energy in Windsor, Ontario, was linked to maintaining production at the Toronto-area plant.

Appearing at another committee hearing, Teresa Piruzza, the director of external affairs for Stellantis Canada, described the production move from the factory in Brampton as “an operational pause.” She added, “It has not closed, and those employees remain employees of Stellantis.”

Ms. Piruzza said that the company was in talks with the governments of Canada and Ontario about the future of the factory.

“Stellantis has been in Canada for over a hundred years now, and we remain committed to Canada,” she said.

The company declined to comment about the default notice.

This week, Stellantis started making gasoline-powered muscle cars at its factory in Windsor that also builds minivans and electric muscle cars. The company plans to add 1,500 more workers there next year.

Mr. Trump imposed a 25 percent tariff on vehicles made in Canada this year, a move that Canada reciprocated for autos moving in the other direction. Companies like Stellantis that have production in Canada were initially exempt from the Canadian retaliation. But after the Brampton announcement, Canada said it was cutting by half the number of Stellantis vehicles that could come into Canada tariff free.

The decision not to reopen the Brampton assembly line is one of a series of recent setbacks for Canada’s auto industry after Mr. Trump’s imposition of tariffs and disappointing sales of electric vehicles that were partly created by the president’s cancellation of E.V. incentives for car buyers.

General Motors closed an electric van plant in Ontario amid weak sales and will eliminate a shift from a full-size pickup assembly line in Oshawa, Ontario, which is likely to affect up to 2,000 jobs in that community.

The Canadian government has reduced the number of vehicles that G.M. can import tariff free by 24 percent.

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