Volkswagen’s battery manufacturing plans in Canada have been delayed, with PowerCo Canada now expecting its Ontario cell plant to begin production in 2029. The revised timetable moves the start date back by two years and adds to a series of changes affecting the group’s North American electric-vehicle strategy.
PowerCo Canada revises Ontario production timeline
PowerCo Canada, Volkswagen Group’s battery subsidiary, has announced that production at its planned Ontario battery factory will not begin until 2029. The project had previously been expected to start output two years earlier.
The delay is significant because the facility is intended to support a more localised North American EV supply chain. Battery manufacturing has become a central strategic issue for carmakers seeking to reduce exposure to overseas supply networks, manage trade risks and support regional vehicle production.
Volkswagen is not alone in reconsidering battery plans. Battery factories and EV programmes have been scaled back or reassessed in several markets as manufacturers respond to demand developing more slowly than expected and to changing trade conditions. For Volkswagen, the Ontario delay represents another setback in its effort to expand electric-vehicle operations in North America.
Trade pressures complicate Volkswagen’s US position
Volkswagen’s North American operations have faced additional pressure from US tariffs. The group’s two Mexican factories are now exposed to US tariffs, while the company’s Chattanooga, Tennessee, plant currently builds the Volkswagen Atlas and Atlas Cross Sport.
The Chattanooga factory also previously produced the Volkswagen ID.4 electric SUV. That model has been discontinued there so the plant can build more internal-combustion SUVs, according to the report. Volkswagen has nevertheless indicated that it still plans to localise EV production in North America at a later stage.
The company’s future regional EV models are expected to use software-defined vehicle technology developed through Volkswagen’s joint venture with Rivian. The partnership is designed to help Volkswagen strengthen its capabilities in vehicle software and electrical architecture, areas that have become increasingly important as automakers compete on digital features, connected services and faster product development.
ID. Buzz return also pushed back
The battery-factory announcement came in the same week that Volkswagen adjusted plans for the ID. Buzz in the United States. The electric van will not return to the US line-up as a 2027 model, despite earlier plans. Volkswagen says an updated version is instead due to arrive as a 2028 model in the first half of next year.
The ID. Buzz has faced a difficult commercial backdrop in the US, where its pricing and driving range have been challenging factors. A 25% tariff adds further pressure to the business case for the model.
More broadly, Volkswagen is managing several simultaneous challenges. The group faces a contracting business in China, rising competition in Europe, higher European energy costs and tariffs in the US. It is also continuing a costly transition towards electric vehicles while trying to improve its competitiveness in software-defined cars.
Volkswagen has been restructuring parts of its European industrial footprint, closing a German plant last year for the first time in its 88-year history and reducing jobs. Alongside the Rivian joint venture, the company is working with Chinese automaker Xpeng on next-generation vehicles for China.
The Ontario battery plant remains part of Volkswagen’s longer-term electrification strategy, but its move to 2029 underlines how much longer the transition may take. For now, the company’s North American EV ambitions will depend on navigating tariffs, reshaping production plans and bringing more competitive electric products to market.
