Volkswagen delays St. Thomas battery plant opening to 2029, citing next-generation technology

Volkswagen's subsidiary PowerCo Canada has delayed the opening of its St. Thomas, Ontario battery plant from 2027 to 2029, a setback to Canada's multibillion-dollar bet on electric-vehicle manufacturing.

The $7 billion project, originally announced in 2023 and expected to create 3,000 direct jobs plus tens of thousands of indirect jobs in the region, is now slated to begin operations in 2029 to "accommodate next-generation battery technology, while retaining the flexibility to scale over time as market conditions evolve," PowerCo said in a news release. The company declined to make a spokesperson available for an interview about the delay.

Construction began in October 2025, with work starting on foundations for the facility. In August 2025, PowerCo had awarded two major construction contracts for the project. The delay comes as major EV and battery projects across Ontario, Quebec and British Columbia have been delayed, cancelled, suspended, substantially changed, or gone bankrupt.

Greig Mordue, a former Toyota executive and retired McMaster University professor who studies the auto industry, has long questioned the plant's viability. When PowerCo announced the project in 2023, it said the plant would eventually produce enough battery cells for roughly one million EVs a year. Mordue flagged fundamental inefficiencies: Volkswagen's major assembly operations are in the southern United States and Mexico, meaning batteries from St. Thomas would travel long distances to reach vehicles. Volkswagen already has battery production capacity in Europe, and the company's North American plants do not produce enough vehicles to provide an obvious market for one million batteries annually.

"They got a million batteries. What are they going to do with them?" Mordue said.

VW said the plant remains the cornerstone of its North American battery strategy and that construction is continuing despite the production delay. The company said the postponement allows incorporation of newer battery technology and scaling production as demand develops.

Mordue suggested the delay could reduce taxpayer exposure, though he did not elaborate. The federal government is conducting its own study of various third-party economic analyses on the potential costs of the delay and market shifts affecting the sector.