The construction of an electric vehicle (EV) battery “gigafactory” by a Volkswagen subsidiary in St. Thomas, Ont., is now set to commence operations in 2029, a two-year delay from the original schedule. PowerCo Canada, in a news release, announced the hiring of EllisDon Corporation from Mississauga, Ont., as the general contractor for the factory’s construction. The delay is to align with next-generation battery technology and allow for scalability as market conditions change.
Initially planned for a 2027 launch, the $7 billion factory, supported by up to $13 billion in federal subsidies, was first revealed in 2023. It was projected to create 3,000 direct jobs and numerous indirect job opportunities in the region.
In preparation for the factory’s establishment, surrounding municipalities and the provincial government undertook infrastructure projects to enhance sewer and road capacities in anticipation of a population increase in 2027. Before the plant’s announcement, St. Thomas was granted permission by the province to annex land from Central Elgin to facilitate development.
In August 2025, PowerCo Canada awarded significant construction contracts for the project, with construction commencing in October 2025 on the facility’s foundations. St. Thomas Mayor Joe Preston expressed confidence in the project despite the delay, emphasizing the local contractor’s selection and the ongoing construction activities.
Preston highlighted the presence of approximately 500 workers employed by PowerCo in the St. Thomas area since August 2025. He mentioned the progress at Yarmouth Yards, an industrial park in St. Thomas attracting industries complementary to battery production.
The selection of EllisDon as the general contractor was praised by provincial officials, indicating a significant milestone towards job creation in the supply chain. However, Conservative MP Andrew Lawton expressed disappointment over the delay, questioning Volkswagen’s dedication to the plant and urging federal government intervention to uphold commitments.
Market conditions affecting PowerCo’s decision have prompted adjustments in Ontario’s electric vehicle production plans. General Motors’ decision to halt production of the Chevrolet BrightDrop electric delivery van in Ingersoll due to lower demand resulted in worker layoffs. Honda also postponed and eventually canceled plans for a $15 billion EV plant in Alliston in 2025, citing ongoing market assessment.
Despite these challenges, Canadian EV sales have shown growth, with Statistics Canada reporting a more than 20% increase in new EV purchases compared to the previous year. The fluctuating sales figures indicate changing consumer preferences in the EV market.