St. Thomas EV battery plant ‘fully on track’ to open in 2027: Volkswagen

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Setbacks and delays in the electric vehicle sector will not slow the opening of the Volkswagen EV battery plant in St. Thomas, the automaker tells The Free Press.

The global EV industry has slowed, with automakers and suppliers delaying production plans in response to sluggish sales.

In addition, VW’s PowerCo plant in St. Thomas has not yet named its suppliers, telling some it may be 2025 before they are identified. That’s a tight timeline for the 2027 opening of the local EV battery assembly plant but that remains the target, PowerCo Canada officials said in an email statement.

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“The ramp-up of gigafactory St. Thomas is fully on track. Site preparation has already been completed. We aim to produce the first cells in 2027, followed by demand-based ramp-up of mass production,” the company said.

But Umicore, a partner and supplier to PowerCo, has announced it will delay the opening of its proposed plant in Kingston, which is expected to supply PowerCo.

Umicore plans to make cathode materials, key to EV battery assembly, on an industrial scale but announced in July it is delaying construction. Its revenues for battery materials were about $321.5 million in the first half of 2024, down 33 per cent from the same period last year.

“There may be speculation (about the PowerCo opening) and if it got pushed back to 2028 it wouldn’t be a huge shock, but we understand they plan on opening in 2027,” said Brendan Sweeney, director of the Trillium Network for advanced manufacturing, a nonprofit advocacy group for Ontario manufacturing.

The St. Thomas plant will supply Volkswagen with batteries for vehicles being manufactured at its plant in Tennessee making the ID.4 and in South Carolina making the Scout vehicle. As long as those are scheduled for assembly, the batteries are needed, Sweeney said.

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“The indicator of when St. Thomas will ship product will be less about suppliers, but more about the timelines and production for Chattanooga and the Scout plant in South Carolina.”

PowerCo has hired nearly 100 staff in St. Thomas and continues to build its administration team.

Though the industry is in slowdown, automakers are keenly aware Chinese EV automakers, among the best in the world, are looking to sell into the North American market in 2025 so they can’t afford to hit the brakes too hard, Sweeney said. 

“They have to build the supply chain here. If they don’t, someone will come in and eat their lunch,” he said.

Though global sales of electric vehicles grew by 11 per cent in the first six months of 2024, the increase was well below the sales increases in the previous two years. During the first half of 2022, full electric vehicle sales increased by 73 per cent and last year sales increased by 36 per cent in the same time period.

Bloomberg News forecast a slowing market with sales of battery-electric vehicles projected to decline by 6.7 million vehicles through 2026.  Still, the long-term projections are strong, said the industry website Global EV Outlook, with 20 per cent of vehicle sales expected to be electric during the next decade.

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“From what we are hearing, everything is on track” for the opening of PowerCo, said Sean Dyke, chief executive of the St. Thomas Economic Development Corp. “We’re powering forward and they have a building permit to start construction. Everything is in order.”

Concrete will be poured for the plant later this fall, Dyke said.

There are now about a half-dozen suppliers looking at sites in the area and just awaiting word on whether they will be chosen by Volkswagen before moving to build a plant, he said. 

“But that’s not the full extent of interest. It’s going to happen, we’re shifting to EVs, but it may be a long process,” he said.

It has been widely reported that high vehicle costs and lack of charging stations, especially in the U.S., are seen as reasons why EV sales have cooled.

Some fallout in the electric vehicle industry:

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• LG Energy Solution, a South Korean battery maker partnering with automaker Stellantis to build an EV plant in Windsor, also supplies Tesla, General Motors and Volkswagen. Its revenue for the fourth quarter 2023 fell 6.3 per cent year-over-year.
• Albemarle, the world’s largest producer of lithium used in EV batteries, is cutting four per cent of its workforce.
• Ford Motor Co. is killing a planned three-row electric SUV and pushing back a new electric version of its best-selling pickup, the F-150, as it focuses on hybrid production. Still, Ford has several EV vehicles remaining in the pipeline and its EV and hybrid sales grew this year over last, with EVs making up five per cent of sales compared with 3.8 per cent a year ago.
• At GM, EV sales were down in the first quarter by 21 per cent year-over-year and make up about 2.8 per cent of the automaker’s total sales compared to 3.4 per cent a year ago.
• Stellantis, which manufactures Ram, Jeep and Dodge, saw U.S. hybrid EV sales drop nearly 12 per cent last quarter compared to one year ago, the slowest period for plug-in hybrid sales since early 2023.    

ndebono@postmedia.com

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