Canada's EV Billion-Dollar Bet Hits Reality Check: VW Plant Delayed, Honda Paused, Northvolt Gone

The federal and provincial governments bet billions on a rapid EV boom. But a CBC investigation finds that major EV and battery projects across Ontario, Quebec, and British Columbia have been delayed, cancelled, suspended, substantially changed — and in one case, gone bankrupt — as automakers adjust to weaker-than-anticipated demand.

The scorecard of setbacks

• Volkswagen PowerCo (St. Thomas, Ont.): The $7-billion battery plant, originally targeting 2027 production, now won't start until 2029 — a two-year delay attributed to "evolving market demand." Federal and Ontario governments committed $13.2 billion in production subsidies tied to output.
• Northvolt (Bécancour, Que.): The Swedish battery maker's Quebec gigafactory collapsed into bankruptcy in late 2025 after raising billions. The project had secured $1.34 billion in federal and provincial support.
• Honda (Alliston, Ont.): The $15-billion EV investment plan has been paused indefinitely, with Honda shifting some CR-V production to the U.S. instead.
• Ford (Oakville, Ont.): The $1.8-billion EV assembly plant plan was scrapped entirely; Ford will retool for gasoline pickups instead.
• Umicore (Kingston, Ont.): The cathode material plant was suspended in 2024.
• Asahi Kasei (Port Colborne, Ont.): The Japanese separator maker delayed its Canadian plant citing the Honda EV slump.
• Lion Electric (Saint-Jérôme, Que.): The Canadian EV bus maker entered liquidation in 2025.
• Taiwanese firm (Maple Ridge, B.C.): A $1-billion battery plant plan with federal support was halted in late 2024.

Scale and location questions

Grieg Mordue, a former Toyota executive and retired McMaster University professor, says the St. Thomas plant illustrates two structural problems with Canada's EV investment strategy: scale and location. When announced in 2023, PowerCo said the plant would eventually make enough battery cells for roughly one million EVs a year. But Volkswagen's major assembly operations are in the southern U.S. and Mexico — batteries from St. Thomas would travel long distances to reach vehicles. Even combined, VW's North American plants don't produce enough vehicles to absorb a million batteries annually.

"They got a million batteries," Mordue says. "What are they going to do with them?"

There is a potential upside for taxpayers: much of the VW subsidy is production-linked. With production now starting in 2029 and incentives declining from 2030 to 2032, governments will likely pay "a whole lot less" than the original maximum. Innovation, Science and Economic Development Canada confirms $700 million has been contributed so far to St. Thomas construction.

The counter-argument: these are 50-year bets

Joanna Kyriazis, director of policy and strategy at Clean Energy Canada, argues these investments operate on a 50-to-70-year horizon. The current slowdown is growing pains in an industry still transitioning, not evidence Canada built too much capacity. She points to signs of recovery: battery-only EV registrations rose 37.4% in Q2 2026 year-over-year, and total zero-emission vehicle registrations (including hybrids) hit 58,811 — up 26.7% — according to Statistics Canada.

Kyriazis also notes the battery market extends beyond vehicles. As electricity grids expand, grid-scale storage could absorb significant capacity — the St. Thomas and Windsor sites were partly positioned for this dual-market play.

The demand reality check

University of Guelph economics professor Ross McKitrick is less convinced. He argues governments built policy around demand expectations far exceeding what emerged. "What the government's been trying to do is force that market into existence. The numbers just don't add up." EVs accounted for 11.7% of new light-duty vehicle sales in Canada in Q1 2026 — down from a peak of 15.4% in 2024, per Transport Canada.

Ottawa scrapped EV sales requirements in 2026 and is moving to repeal the broader federal mandate, replacing it with emissions standards currently under consultation until October 29.

China's dominance remains the strategic driver

The wider justification for domestic battery capacity hasn't disappeared. The International Energy Agency reports China produced more than 80% of the world's battery cells last year, leaving North America and Europe racing to build domestic supply chains. Whether Canada's bet was early or misplaced, the strategic impulse — reducing reliance on a single geopolitical source for a critical technology — remains intact.

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