The Volkswagen subsidiary building an electric vehicle (EV) battery “gigafactory” in St. Thomas, Ont., says the facility is now expected to begin operations in 2029, two years later than originally planned.

PowerCo Canada made the announcement in a news release about hiring Mississauga, Ont.-based EllisDon Corporation as the general contractor for construction of the factory.

“St. Thomas is now expected to begin operations in 2029 to accommodate next-generation battery technology, while retaining the flexibility to scale over time as market conditions evolve,” said a news release.

PowerCo declined to make a spokesperson available for an interview with CBC News about the delay.

Originally scheduled for a 2027 opening, the $7-billion factory — with a promise of up to $13 billion in subsidies from the federal government — was first announced in 2023. It was estimated it would result in the creation of 3,000 direct jobs and tens of thousands of indirect jobs in the region.

To prepare for the arrival of the plant, surrounding municipalities and the provincial government have undertaken infrastructure projects to increase sewer and road capacity for the population boom that was expected in 2027.

Before the plant was announced, the province allowed St. Thomas to annex land from the neighbouring municipality of Central Elgin to make room for the development.

In August 2025, PowerCo Canada announced it had awarded two major construction contracts for the project. Construction began in October 2025, with work starting on the foundations for the facility.

St. Thomas Mayor Joe Preston, who has championed the factory as a major driver of economic growth for his city, told CBC News he’s unfazed by the two-year delay.

“They’ve picked a great local Canadian general contractor and in doing so, they had to adjust the [opening] date,” said Preston.

PowerCo has been hiring workers in the St. Thomas area since August 2025. Preston estimates roughly 500 people are currently employed by the company in the surrounding area.

He also cited “the number of employees they already have working and living in the city of St. Thomas, the amount of construction that’s going on in that site each and every day” as reasons for maintaining confidence in the project.

Preston also pointed to Yarmouth Yards, a large industrial park developed by St. Thomas, which is being populated by industries that are complementary to battery production.

Provincial officials also welcomed EllisDon’s selection as general contractor.

In a written statement to CBC News, a spokesperson for the Ministry of Economic Development, Job Creation and Trade said the contract “represents a major milestone as they work towards the start of production that will create thousands of direct and indirect jobs across the supply chain.”

The ministry’s statement didn’t address the two-year delay.

“We look forward to continuing to work with PowerCo as they progress on their $7-billion gigafactory in St. Thomas that will position Ontario at the forefront of innovative battery and automotive production for decades to come,” it said.

Area MP raises concerns

Andrew Lawton, the Conservative MP representing Elgin—St. Thomas—London South, called news of the delay disappointing and questioned Volkswagen’s commitment to the plant.

“I realize that Volkswagen is saying it’s just about pace and not about the overall commitment. But ultimately, it is about the commitment because we were expecting this to be moving forward at a speed that we’re just not seeing,” Lawton said.

Lawton also said he wants to know what the federal government is doing to move things along and ensure Volkswagen remains committed.

“We saw $13 billion worth of federal subsidies put forward to this and the promise — the expectation — was 3,000 well-paid local jobs, not to mention the construction jobs. All of this has been thrown into jeopardy right now.”

EV market shifts affect Ontario auto plans

The market conditions cited by PowerCo come as automakers across Ontario have adjusted plans for electric vehicle production amid changes in EV demand.

In April 2025, General Motors cited lower-than-expected demand when it announced plans to halt production of the Chevrolet BrightDrop electric delivery van at its CAMI Assembly plant in Ingersoll. Hundreds of workers were laid off.

Honda also delayed plans for a $15-billion EV plant in Alliston in 2025 before ultimately cancelling the project. The company said it would continue to assess the EV market.

At the same time, Canadian EV sales have shown signs of growth.

Statistics Canada data released in June showed the number of new EVs purchased by Canadians had increased by more than 20 per cent compared with the same period a year earlier.

Canadians bought 8,672 new EVs in January, 12,547 in February and 21,574 in March before sales fell to 17,795 in April.