LILLEY: Delayed EV battery plant could save taxpayers billions

A delayed opening and weaker EV demand mean billions in tax credits are likely never claimed.

Published Sep 25, 2026  •  Last updated 1 hour ago  •  3 minute read

Construction cranes continue work on the PowerCo's EV Battery Plant in St. Thomas, Ont. on Wednesday, July 8, 2026. Photo by Geoff Robins /Geoff Robins/The London Free Pre

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The real news out of St. Thomas, Ont., isn’t that the Volkswagen electric vehicle battery plant is two years behind schedule; it’s that the thing is still being built at all.

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PowerCo, the company behind the plant, announced Thursday that it had selected EllisDon to build the mega-facility. The expected opening date is now 2029, two years behind schedule.

Originally announced in the spring of 2023 to great fanfare, the project was supposed to open in 2027.

“It will create thousands upon thousands of great jobs. It will be worth over $200 billion for the Canadian economy over the coming decades,” then-prime minister Justin Trudeau said at the time.

Ontario Premier Doug Ford also touted the size of the investment.

“This investment, the largest auto investment in our province’s history, is a big win for Ontario, the people of St. Thomas and surrounding areas,” Ford said in April 2023.

When the project was announced, the federal government committed $700 million toward infrastructure while the province put up $500 million. This was for things like roads, sewers, a nearby paramedic station and other items related to making the plant feasible.

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The bigger number everyone talked about was the $13 billion in tax incentives.

The good news for taxpayers is that, given the structure of the deal and the state of the EV market, VW is never getting close to collecting that $13 billion.

Billions left on the table

The way the deal was structured, VW would receive production credits based on battery production and employment levels.

To get close to that $13 billion, the plant would have needed to operate at full capacity from its opening day in 2027 until the production credits were phased out in 2032.

With the plant not opening until 2029 at the earliest, and credits being reduced in 2030 before ending in 2032, there is no realistic way for VW to fully capitalize on the tax credits.

The justification for the deal was always that the tax revenue generated by building the plant, and the taxes on the goods produced, would more than make up for the incentives.

Now, we’re lucky the plant is being built at all.

In its statement awarding the construction contract, PowerCo also said it is “aligning the project’s timeline and product strategy with evolving market demand.”

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“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,” the company said.

And those evolving market conditions have a simple explanation: people aren’t buying EVs the way governments expected.

Construction has begun on the massive Volkswagen battery plant in St. Thomas, Ontario. (Derek Ruttan/London Free Press) Photo by Derek Ruttan /Photo by Derek Ruttan/London Fre

EV boom hits the brakes

When the plant was announced, California had passed an EV mandate, the Biden administration imposed one across much of the American auto market, and the Trudeau government followed with similar policies in Canada.

Demand for battery electric vehicles was rising year over year and peaked in 2024, with 1.3 million new EVs sold in the United States and 202,000 sold in Canada.

At full capacity, the St. Thomas plant could produce enough batteries for nearly every EV being sold in North America today.

Of course, VW’s share of the EV market is small, hovering around 5% to 7%.

Sales of battery-powered EVs across North America have fallen from more than 10% of all new vehicle sales to around 7%.

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With mandates now gone in the United States and pushed back in Canada, demand is unlikely to rebound anytime soon.

That’s why this plant still being built at all is remarkable.

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Ford’s real concern

“I’m feeling good that they are actually building,“ Premier Ford told reporters Friday morning at Queen’s Park.

“What would make me worried is if they weren’t building.”

Right now, there are 60 EllisDon workers on site. That is expected to ramp up to roughly 1,300 workers at peak construction.

How many people will work on site once the plant is up and running remains to be seen. Perhaps the plant will be producing something other than batteries when it is operational.

For all the criticism of governments picking winners and losers, this deal had one crucial safeguard: no production, no subsidy. Given the state of the EV market, that decision has already saved taxpayers billions.

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