Canada bet billions on an EV boom. Was it too much, too soon?
The federal and provincial governments bet billions on the rapid rise of the electric vehicle industry. But major EV and battery projects in Ontario, Quebec and British Columbia have since been delayed, cancelled, suspended, substantially changed — and in one case, gone bankrupt — as automakers and suppliers adjust to weaker-than-anticipated demand.
The latest is Volkswagen’s massive PowerCo battery plant in St. Thomas, Ont., where production has been pushed back two years to 2029, because of “evolving market demand.”
The setbacks are raising questions about whether Canada bet too big on how quickly the EV market would grow. Critics say demand may never reach the levels needed to support the scale of battery production governments sought to attract, while others argue these are temporary delays in the decades-long shift toward electrification.
A million batteries, but for what?
Grieg Mordue, a former Toyota executive and retired McMaster University professor who studied the auto industry, says the St. Thomas plant illustrates two problems with Canada’s EV investment strategy: scale and location.
When the project was announced in 2023, PowerCo said the plant would eventually make enough battery cells for roughly one million EVs a year.
Mordue says that seemed inefficient since Volkswagen’s major assembly operations are in the southern United States and Mexico, meaning batteries produced in St. Thomas would have to travel long distances to reach the vehicles they’re intended to power.
Europe isn’t the obvious destination either, he says, because Volkswagen (VW) already has battery production capacity there.
Even together, VW’s North American plants don’t produce enough vehicles to provide an obvious market for a million batteries a year.
“They got a million batteries,” he said. “What are they going to do with them?”
VW and its PowerCo subsidiary did not respond to a request for comment.
VW has said the plant remains a cornerstone of its North American battery strategy and is continuing construction even as it pushes production back.
VW also said the delay will allow it to incorporate newer battery technology and scale production as demand develops.
It could also have an upside for taxpayers, Mordue said — in the form of a smaller subsidy bill.
Much of the support promised to Volkswagen is still tied to how many batteries the plant produces. With production now set for 2029, and with those incentives scheduled to start declining in 2030 and ending in 2032, Mordue said governments will likely pay “a whole lot less” than the original maximum.
Innovation, Science and Economic Development Canada said in a…
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