The federal and provincial governments invested billions in the quick growth of the electric vehicle industry. However, significant EV and battery projects in Ontario, Quebec, and British Columbia have faced delays, cancellations, suspensions, major changes – and one even went bankrupt – as automakers and suppliers respond to lower-than-expected demand.
The most recent setback is Volkswagen’s large Power Co battery plant in St. Thomas, Ont., where production has been postponed by two years to 2029 due to “evolving market demand.”
These issues raise doubts about whether Canada overestimated how fast the EV market would expand. Critics argue that demand may never hit the levels needed to justify the scale of battery production that governments aimed to attract, while others believe these are just temporary setbacks in a long-term shift toward electrification.
A million batteries – but for what purpose?
Grieg Mordue, a former Toyota executive and retired Mc Master University professor who studied the auto industry, states that the St. Thomas plant highlights two key problems with Canada’s EV investment approach: scale and location.
When announced in 2023, Power Co claimed that the plant would eventually produce enough battery cells for around one million EVs each year.
Mordue thinks this is inefficient since Volkswagen’s main assembly facilities are located in southern United States and Mexico; therefore, batteries made in St. Thomas would need to travel long distances to reach their intended vehicles.
A person handles an electric vehicle battery on display at the EV & Charging Expo in Toronto. Ottawa and the provinces have committed billions of dollars in public support to attract EV and battery manufacturing. (Oksana Shtohryn/CBC)
Europe isn’t a clear destination either because VW already has battery production capabilities there, he notes.
Even combined, VW’s North American factories don’t make enough cars to create a clear market for a million batteries annually.
“They got a million batteries,” he said. “What are they going to do with them?”
VW and its Power Co subsidiary did not reply when asked for comments.
Ontario Premier Doug Ford speaks at a news conference announcing the St. Thomas plant in 2023. (Kate Dubinski/CBC)
VW stated that the plant remains central to its North American battery strategy and construction continues despite pushing back production timelines.
Additionally, VW mentioned that this delay allows them to implement newer battery technologies while scaling up production as demand evolves.
This could also benefit taxpayers by leading to a smaller subsidy bill according to Mordue.
A lot of support promised to Volkswagen is still connected to how many batteries will be produced at the plant. With production now set for 2029 alongside incentives expected to start declining in 2030 until they end in 2032, Mordue believes governments will likely spend “a whole lot less” than initially planned.
Innovation, Science and Economic Development Canada reported contributing $700 million so far towards constructing the St. Thomas battery plant while noting Ontario covers one-third of the agreed $13.2 billion subsidies for production costs.
“The government remains engaged with Power Co on their updated timelines,” it stated.
Ontario’s Ministry of Economic Development Job Creation and Trade did not respond by deadline.
A long-term investment?
Nonetheless, some argue that focusing solely on current EV demand overlooks how investments like St. Thomas were intended for longer time frames.
A sign marks the entrance to General Motors’ CAMI Assembly plant in Ingersoll, Ont. The plant was converted into Canada’s first full-scale EV plant in 2022 but production was suspended in 2025.(Denis Babin/CBC/Radio-Canada)
“These investments are meant to last 50 to 70 years or more,” Joanna Kyriazis from Clean Energy Canada told CBC News. p >
She added that today’s slowdown should be viewed as growing pains within an industry that’s still transitioning rather than proof Canada overbuilt its battery capacity.
There are signs suggesting Canada’s EV market may already be bouncing back after a slowdown.
New registrations of fully electric vehicles rose by 37.4 percent during Q2 of 2026 compared with last year according Statistics Canada. When hybrid models are included Canadians registered 58 ,811 new zero-emission vehicles during this quarter which marks an increase of 26.7 percent.
Kyriazis emphasizes these investments aim at keeping Canada competitive amid historic shifts occurring within global auto industries moving away from gasoline-powered vehicles.
An electric vehicle’s charging port is displayed at the 2026 Canadian International Auto Show in Toronto. Despite government subsidies given both producers consumers , electric vehicles accounted for only around eleven point seven percent out all new light-duty vehicle sales across nation first three months year twenty-six.(Michael Charles Cole/CBC)
“It’s not about holding onto our spot within North America auto sector but determining if we can maintain any sort viable automotive presence twenty-first century.” she pointed out
“There’s clear direction being taken globally when comes automobile manufacturing , if we want remain part competitive industry future must produce sell competitively priced electrical units components needed make them.”
Kyriazis suggests potential markets these batteries extend beyond just electric automobiles too. As electricity networks grow larger increasingly require energy storage solutions helping balance supply demands.
The sites such as Saint Thomas along Next Star facility Windsor , she explains , were focused short-term strategies creating power-storage devices used grid-scale applications while uptake North American Evs started leveling off.”
Kyriazis argues retreating U. S.-based companies from field shouldn’t define entire landscape industrial strategy spanning decades ahead future policies may change again based different administrations coming into play.”
This hints there might’ve been premature timing rather than fundamentally misplaced judgment regarding investing into ev-battery capabilities domestically expanded well beyond what’s traditionally seen from China-producing over eighty percent world’s cells last year per International Energy Agency thereby prompting North American European governments build independent supply chains concentrated heavily Asia.”
Will buyers catch up?
h1>PUniversity Guelph economics professor Ross Mc Kitrick sees it differently believing simply giving things time won’t resolve fundamental issues existing today surrounding ev-market potentials… He acknowledges established presence yet points out governmental policies built upon anticipated numbers vastly exceeding actual sales figures experienced thus far…
“What government’s been trying do is force that market existence,” said Mc Kitrick “the figures don’t align.”
P Mc Kitrick cites numerous incentives offered manufacturers construct ev-batteries simultaneously pushing consumers buy highlighting evidence showcasing inability sustain self-sufficiently envisioned government standards… In paper Canadian Journal Economics twenty-four warned scenario arises wherein requirements sales surpass willingness purchase could negatively affect manufacturers broader economy altogether.. Ottawa scrapped earlier mandates concerning electric vehicle targets recently indicated intention repeal broader federal guidelines introducing alternative emissions regulations consultations running until October twenty-nine.. Electric cars still represent minority amongst newly sold options despite initiatives encouraging shoppers embrace them! Statistically revealing accounts recorded eleven point seven percentage total purchases light-duty units throughout opening months year two-thousand twenty-six reflecting decline peak fifteen-point four previous years result.. “Currently it’s niche marketplace,” remarked Mckitrick “a select few households appreciate product willing pay premium price.”
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