Canadians worry over electric vehicle manufacturing sector
With Canada’s electric vehicle industry stalling this week, some are worried the sector may experience a full-scale power outage in the months ahead.
“You have to be worried, what (the industry) is looking at it, they’re looking at the (U.S.) tariffs”, says Ivey Business School professor Gal Raz.
Honda‘s decision to take a reported 2-year break on its $15-billion investment in Ontario, that was to include multiple EV battery plants and a made-in-Canada supply chain, has caused some industry watchers to re-evaluate other large scale Canadian EV projects from Stellantis and Volkswagen.
Raz says 2025 has seen a sluggish start to EV sales, adding the shutdown of the federal government’s EV rebate program hasn’t helped sales.
“In Canada a lot of the rebates have been taken back, they were reduced in Quebec, in British Columbia, Ontario hasn’t had a consumer rebate since 2018. All of that is part of the reason EV sales are slowing from their peak highs” says Raz.
Canada’s newly appointed Minister of Industry, Melanie Joly faced multiple questions on the struggling Canadian industry during her first day in cabinet since the federal election.
Joly tells CTV News, “I’ve already been in contact with the CEOs of GM, Ford and Stellantis. My goal is to have good conversations with them before the end of the week.”
She later released a statement Wednesday night, following Honda Canada’s announcement, saying she spoke with its CEO and president reassuring Canadians that “no jobs will be lost.”
“Workers will keep their good-paying jobs and working conditions won’t change,” she said, adding that the company is still committed to major EV investments in Canada.
Stellantis and LG Energy Solution have partnered to create the NextStar Energy battery plant in Windsor, Ont. It is Canada’s first large scale EV battery manufacturing facility.
In a statement, a NextStar Energy spokesperson says the project “is on track to begin cell production later this year.”
Volkswagen and PowerCo are scheduled to open North America’s first EV battery cell gigafactory in St. Thomas, Ont.
The company told CTV News, they “remain on track for initial production in 2027, followed by a demand-based ramp-up of commercial production.”
Though the batteries scheduled to be manufactured at the Volkswagen-backed PowerCo plant in Canada, are for vehicles being made in South Carolina and Tennessee.
According to industry insiders, large scale auto infrastructure investments are now facing stiff headwinds as U.S. President Donald Trump’s tariff storm blows through.
“The board of Volkswagen is going to come and say, what’s happening with us? Are we still keeping the same decision?” says Raz. He adds that it’s possible that Volkswagen may soon ask itself the question “should we postpone also and have a wait and see approach? Wait and see when the U.S. administration is done in four years?”
Those watching the industry in Canada closely say a healthy EV manufacturing sector needs continued government investment to help build up the supply chain infrastructure, but Ottawa and the provinces need to come up with new, unique consumer incentives, especially if the federal government is serious about achieving 100 per cent zero emission vehicles sales by 2035.
This article was first reported by CTV News
