Volkswagen's EV battery-maker charges ahead with $7 billion gigafactory as rivals' plans stall

National Observer

16-05-2025

Volkswagen-owned EV battery manufacturer PowerCo is 'confident' the state-of-the-art gigafactory it is building in southern Ontario will move into production in 2027, despite market headwinds that have led the province's five other auto majors to pull back from multi-billion-dollar sector investments over the past year.
PowerCo, which has a $7 billion battery plant under construction in St, Thomas, credited a flexible technology manufacturing strategy with helping it weather regional sector uncertainties in Canada created by the combination of a slow-down in EV demand and the impact of US auto sector tariffs.
Earlier this week, Honda Motors became the latest international automaker to pump the brakes on its EV supply chain development plans in Ontario, blaming "changing conditions' for the postponement of its $15 billion investment in the province.
The decision adds to the mounting woes faced by Canada's EV manufacturing ambitions, which have already encountered setbacks with Ford, General Motors, Stellantis, and Toyota having paused or shelved factory construction plans, leaving the government's $100 billion strategy in limbo.
'Different companies will have different strategies for the markets and plants they serve. For PowerCo, Gigafactory St. Thomas is a strategic, long-term investment with strong fundamentals,' Tegan Versolatto, PowerCo's Canada spokesperson, told Canada's National Observer.
She said the company remained 'on track' to start battery manufacturing in 2027, followed by a ramp-up of commercial production if there was market demand. Verolatto noted that key infrastructure work on the factory site, including a rail spur and substation, is 'well underway.'
'Technology agnostic' battery cell
PowerCo's batteries are engineered around what the company calls a "unified cell' — a design that is not limited to current battery cell chemistries like lithium-ion — that would be produced in a standardized factory to reduce costs.
'Different companies will have different strategies for the markets and plants they serve. For PowerCo, Gigafactory St. Thomas is a strategic, long-term investment with strong fundamentals,' Tegan Versolatto, PowerCo's Canada spokesperson
'Our product and production is as simple as possible and at the same time highly flexible. This enables us to react to potential market changes and always have the right product in place,' Versolatto said.
All PowerCo battery plants — along with St. Thomas, in Salzgitter, Germany, and Valencia, Spain — will produce the company's cell design, she added. 'That makes our global production network highly flexible and compatible to all scenarios. This enables us to react to potential market changes and always have the right product in place.'
Between October 2021 and April 2024, a total of $46.1 billion in investments across the Canadian EV supply chain was announced by automakers including Honda, Volkswagen, GM and Ford, with a further $52.5 billion in support coming from federal and provincial coffers, according to Canada's Parliamentary Budget Officer, who is responsible for providing economic and financial analysis to the government.
But dark clouds have gathered for months over the long-term future of auto manufacturing in Ontario as the Canada-US trade war has dragged on.
Auto plant lay-offs and closures
Stellantis sent home 3,000 workers after closing its Windsor, Ont. assembly plant where it manufactures Chrysler Pacifica minivans and electric Dodge Charger pony cars — and also temporarily laid off 900 employees at its US facilities, while General Motors shuttered its CAMI plant in Ingersoll, Ont., home to its Brightdrop Zevo electric delivery van, leaving 500 employees out of work.
A high-profile EV battery gigafactory being built in Quebec by technology developer Northvolt was mothballed in March when its Swedish parent company filed for bankruptcy.
More bad news came this week with data from StatsCan. in the last year, with 12,347 new zero emission vehicles sold in March 2025, compared to some 22,390 in the same month in 2024.
During the federal election campaign, Liberal Prime Minister Mark Carney pledged a $2 billion fund to develop an 'all-in-Canada' auto supply chain. In 2023, Canada imported $2.3 billion in EVs and plug-in hybrids from China.
The longer-term outlook for EVs in Canada looks brighter. Statista, a data provider, is forecasting the country's market will still expand to be worth over $11.5 billion in 2025 and grow at almost 10 per cent a year to $17 billion by 2029, by which time almost 250,000 EVs will be on Canadian roads.
Newly appointed federal Minister of Industry Mélanie Joly said during a press scrum yesterday that she aimed to have 'good conversations with [all six automakers] before the end of the week' to discuss their future EV market plans in the country.