A subsidiary of Volkswagen working on an electric vehicle (EV) battery “gigafactory” in St. Thomas, Ontario, has announced a delay in the start of operations. Initially planned for 2027, the facility is now expected to commence operations in 2029 to incorporate advanced battery technology and allow for future scalability based on market conditions.
The announcement was made by PowerCo Canada, which disclosed the selection of Mississauga-based EllisDon Corporation as the general contractor for constructing the factory. The $7 billion project, supported by up to $13 billion in federal subsidies, was first revealed in 2023. It was projected to generate around 3,000 direct jobs and numerous indirect employment opportunities in the region.
To accommodate the incoming plant, various infrastructure projects have been undertaken by surrounding municipalities and the provincial government to enhance sewer and road capacities for the anticipated population growth in 2027. Prior to the factory’s announcement, St. Thomas was granted permission by the province to annex land from Central Elgin to facilitate the development.
Construction work for the project, which began in October 2025, saw the awarding of two major construction contracts by PowerCo Canada in August of the same year. Mayor Joe Preston of St. Thomas, a strong advocate for the factory as a key economic driver, expressed confidence in the project despite the two-year delay.
With PowerCo already hiring workers in the area since August 2025, approximately 500 individuals are currently employed by the company in the vicinity. The mayor highlighted the ongoing construction activities and the presence of employees in St. Thomas as positive indicators for the project’s progress.
EllisDon’s selection as the general contractor was welcomed by provincial officials, affirming the significant milestone in the journey towards production start-up. The Ministry of Economic Development, Job Creation and Trade expressed optimism about the future prospects of the $7 billion gigafactory, emphasizing Ontario’s position in innovative battery and automotive production.
However, the delay raised concerns for Conservative MP Andrew Lawton, who questioned Volkswagen’s dedication to the plant. Lawton emphasized the importance of federal government actions to ensure the project’s successful advancement and job creation promises.
The shift in market conditions affecting PowerCo’s plans aligns with the adjustments made by automakers in Ontario due to changing EV demand. General Motors and Honda have both experienced production halts and cancellations in response to evolving market dynamics, despite promising growth in Canadian EV sales.
The developments surrounding the St. Thomas EV battery plant symbolize a crucial period of adaptation and resilience in the automotive industry, as stakeholders navigate the evolving landscape of electric vehicle production.