Volkswagen Delays St. Thomas Battery Plant as EV Demand Falters
AI-generated image · Bay Street Wire
Production at the PowerCo facility is pushed to 2029, raising questions about the scale of Ontario's electric vehicle industrial bets.
As first reported by CBC News, Volkswagen has pushed the production start date for its PowerCo battery plant in St. Thomas, Ont., back two years to 2029, citing "evolving market demand."
The delay is part of a broader trend affecting electric vehicle (EV) and battery projects across Ontario, Quebec, and British Columbia. CBC News reports that various major projects have been suspended, cancelled, substantially changed, or have gone bankrupt as suppliers and automakers grapple with weaker-than-expected demand.
Grieg Mordue, a retired McMaster University professor and former Toyota executive, told CBC News that the St. Thomas project highlights issues with location and scale. PowerCo previously stated the plant would eventually produce battery cells for approximately one million EVs annually, but Mordue noted that Volkswagen's primary assembly hubs are located in Mexico and the southern United States, making the transport of batteries from Ontario inefficient.
From a fiscal perspective, Mordue suggested the delay could reduce the subsidy burden on taxpayers, as many incentives are tied to production volume and are scheduled to decline starting in 2030 before ending in 2032. Innovation, Science and Economic Development Canada confirmed the federal government has contributed $700 million toward construction, while noting that Ontario is responsible for one-third of the $13.2 billion in agreed-upon production subsidies.
Offering a different perspective, Joanna Kyriazis, director of policy and strategy at Clean Energy Canada, told CBC News that the time scale for these investments is intended to be 50 to 70 years or more. She characterized the current slowdown as "growing pains" in a historic industry shift. Supporting this view, data from Statistics Canada indicates that registrations for new battery-only EVs increased by 37.4 per cent during the second quarter of 2026 over the same period a year prior.